Assume the supply curve shifts to the right by a given amount at each price. The price in the market will decline the most if demand is more _____ and supply is more _____.
A) price-elastic; price-elastic
B) price-inelastic; price-elastic
C) price-elastic; price-inelastic
D) price-inelastic; price-inelastic

Question

Quizplus · Accepted Answer

When demand is price-inelastic, consumers are less responsive to price changes, so a rightward shift in supply leads to a larger decrease in price. If supply is also price-inelastic, the quantity supplied doesn't increase much with price changes, reinforcing the price drop.

Assume the Supply Curve Shifts to the Right by a Given