When Will a Decrease in Supply Cause the Smallest Increase

question 20

Multiple Choice

When will a decrease in supply cause the smallest increase in price

• A)when both supply and demand are inelastic
• B)when demand is elastic and supply is inelastic
• C)when both supply and demand are elastic
• D)when demand is inelastic and supply is elastic

---

Definitions:

Capital Facilities

Assets such as buildings, utilities, and major machinery which are essential for the production process in an organization or for providing services.

Laissez-faire Perspective

An economic philosophy advocating for minimal government intervention in the market, allowing individuals to act according to their own self-interests.

Monopoly Power

The exclusive control by one company over an entire industry or sector, allowing the company to manipulate market prices and conditions.

Antitrust Laws

Regulations established to encourage competition by limiting monopolies, price fixing, and other practices detrimental to free market economics.