Please help! I have a mid-term test in a couple of minutes...
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
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????
Mircoeconomics: Elasticity - John Kholer, Thursday, January 28, 2016 at 10:49am
The answer is indeed D, not A.
You can draw a constant supply, Elastic, and another one Inelastic, and test that... any shift of demand will make more price change when supply is Inelastic