For each of the following assume that the supply curve shifts while the demand c

Question

For each of the following assume that the supply curve shifts while the demand curve remains constant. What is the direction of the supply shift and relative elasticity of demand?

a. Price remains nearly constant. Quantity increases enormously. Demand is (Click to select)highly elastic/ perfectly elastic/ highly inelastic/ perfectly inelastic and supply shifts (Click to select)in/out.

b. Price falls enormously. Quantity does not change. Demand is (Click to select)highly elastic/ perfectly elastic/ highly inelastic/ perfectly inelastic and supply shifts (Click to select)in/out

c. Price remains nearly constant. Quantity decreases enormously. Demand is(Click to select)highly elastic/ perfectly elastic/ highly inelastic/ perfectly inelastic and supply shifts (Click to select)in/out

Explanation / Answer

a. The supply curve shifts to the right, causing the equilibrium quantity to increase. Since the price remains nearly constant and quantity changes enormously, the demand curve is very elastic.
   b.    The supply curve shifts to the right, causing the equilibrium price to fall. Since equilibrium quantity did not change, demand is perfectly inelastic.
   c.    The supply curve shifts to the left, causing the equilibrium price to rise. Since equilibrium quantity changes very little, demand is inelastic.

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.