An Increase in the Demand for a Resource

question 52

Multiple Choice

An increase in the demand for a resource

• A) will cause the price of that resource to fall.
• B) may be the result of a decrease in the demand for products utilizing this resource.
• C) will cause the price of the resource to fall by a smaller amount in the short run than in the long run.
• D) will increase the price of the resource and, thereby, increase the incentive of potential suppliers to provide the resource in the future.

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Definitions:

Cross Elasticity

A measure of the responsiveness of the demand for one product in relation to a change in the price of another product.

Substitutes

Goods or services that can be used in place of each other.

Elastic

A term that describes the sensitivity of the demand for a good or service to a change in its price, with "elastic" demand being significantly responsive to price changes.

Least Elastic

Describes a situation where there is the smallest responsiveness of the quantity demanded or supplied to changes in price, typically associated with goods and services for which there are no close substitutes.