An increase in supply will decrease prices least when demand is
A)elastic.
B)unit elastic.
C)inelastic (but not perfectly inelastic).
D)perfectly inelastic.

Question

Quizplus · Accepted Answer

An increase in supply will decrease prices least when demand is elastic. This is because when demand is elastic, a small change in price will lead to a large change in quantity demanded. As a result, the increase in supply will be absorbed by the increase in quantity demanded, and prices will not fall as much.

An Increase in Supply Will Decrease Prices Least When Demand