If the Demand for Good a Is More Elastic Than

question 8

Multiple Choice

If the demand for good A is more elastic than the demand for good B,a small increase in supply in both markets will cause

• A)a much greater increase in the equilibrium quantity of good A than for good B
• B)a much greater increase in the equilibrium quantity of good B than for good A
• C)the equilibrium quantity will decrease by the same amount in both markets
• D)only the equilibrium quantity of good B will decrease
• E)only the equilibrium quantity of good A will decrease

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Definitions:

Market Price

The current value at which a good or service can be bought or sold in a marketplace.

User Costs

The costs incurred by using an asset or resource, including depreciation, maintenance, and opportunity cost of capital.

Nonrenewable Resource

Natural resources such as coal, oil, and natural gas that cannot be replenished within a human lifetime once consumed.

Mining Firm

A company involved in the extraction of minerals, ores, and other geological materials from the earth.