Economics
JAMB 2013
If the supply of a product is elastic, a small reduction in price will
-
A.
reduce the cost of production
-
B.
reduce the quantity supplied
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C.
increase the quantity supplied
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D.
lead to no change in the quantity supplied
Correct Answer: Option B
Explanation
Elastic demand means a change in price would cause a change in the quantity demanded. In an elastic demand, a small reduction in price would increase the quantity demanded and a decrease in the quantity supplied. This is so because, suppliers will not be willing to supply much goods when the price for it is low.
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