Under which of the following conditions will an increase in demand cause a relatively small increase in price?
A) If the shift of the demand curve is relatively small, the gap between the new demand and the old supply will be relatively small.
B) If there is highly elastic demand, consumers are very responsive to changes in price.
C) If there is highly elastic supply, producers are very responsive to changes in price.
D) All of the above.

Question

Quizplus · Accepted Answer

All the conditions mentioned can lead to a relatively small increase in price when there is an increase in demand. A small shift in demand won't significantly impact price, highly elastic demand means consumers are sensitive to price changes and might not pay much more, and highly elastic supply means producers can easily increase production to meet demand, keeping prices stable.

Under Which of the Following Conditions Will an Increase in Demand