Suppose That in Each of Four Successive Years, Producers Sell

question 171

Multiple Choice

Suppose that in each of four successive years, producers sell more of their product and at lower prices. This could be explained

• A) by small annual increases in supply accompanied by large annual increases in demand.
• B) in terms of a stable supply curve and increasing demand.
• C) in terms of a stable demand curve and increasing supply.
• D) as an exception to the law of supply.

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Definitions:

Elastic Supply

A situation where the quantity supplied of a good changes significantly in response to changes in its price.

Elastic Demand

a situation where the quantity demanded of a good or service significantly changes in response to a change in price.

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in its price.

Excise Tax

A tax charged on specific goods and services, such as alcohol, tobacco, and gasoline.