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April 17, 2014

Homework Help: Mircoeconomics: Elasticity

Posted by Anonymous on Saturday, October 4, 2008 at 11:12am.

Please help! I have a mid-term test in a couple of minutes...

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If the demand for some good fluctuates, but supply is constant, then which of the following combinations would generally yield the greatest quantity fluctuations?
A) large demand fluctuations and elastic supply
B) small demand fluctuations and unit elastic supply
C) small demand fluctuations and inelastic supply
D) large demand fluctuations and inelastic supply
E) small demand fluctuations and elastic supply


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I don't understand why the correct answer is "a". Please explain to me what the question means and why "a" is the correct answer.

I thought the answer was "d" because I thought if supply was constant, it has to be an inelastic supply, but in this case, it is elastic supply????

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