The change in price that results from a rightward shift in demand will be greater if
A) the supply curve is horizontal than if the supply curve is upward sloping.
B) the supply curve is relatively steep than if the supply curve is relatively flat.
C) the supply curve is upward sloping than if the supply curve is vertical.
D) the supply curve is horizontal than if the supply curve is vertical.

Question

Quizplus · Accepted Answer

The change in price that results from a rightward shift in demand is determined by the elasticity of supply. If the supply curve is relatively steep (i.e., relatively inelastic), the change in price will be greater than if the supply curve is relatively flat (i.e., relatively elastic). Therefore, choice B is the correct answer.

The Change in Price That Results from a Rightward Shift