Suppose the demand curve for a product is represented by a typical downward - sl

Question

Suppose the demand curve for a product is represented by a typical downward - sloping curve. Now suppose the demand for this product decreases. Which of the following statements accurately predicts the resulting decrease in price? A)The decrease in price will be proportional to the magnitude of the demand shift. B)The more elastic the supply curve, the smaller the price decrease. C) The more elastic the supply curve, the greater the price increase. D)The increase in price is not affected by the elasticity of the supply curve.

Explanation / Answer

B)The more elastic the supply curve, the smaller the price decrease.

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