Suppose the Demand Curve for a Product Is Represented by a Typical

question 42

Multiple Choice

Suppose the demand curve for a product is represented by a typical downward-sloping curve.Now suppose the demand for this product decreases.Which of the following statements accurately predicts the resulting decrease in price?

• A)The more elastic the supply curve, the greater the price increase.
• B)The more elastic the supply curve, the smaller the price decrease.
• C)The increase in price is not affected by the elasticity of the supply curve.
• D)The decrease in price will always be proportional to the magnitude of the demand shift.

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Definitions:

Business Activity

The various actions undertaken by individuals or entities engaging in commercial, industrial, or professional operations.