The Elasticity of Demand for a Good Tends to Increase

question 65

Multiple Choice

The elasticity of demand for a good tends to increase if:

• A) there is an increase in the availability of complements
• B) the time period considered becomes shorter
• C) the market takes on narrower and more specific boundaries
• D) there is a decrease in the availability of substitutes

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Definitions:

Decreasing Returns

A situation in which adding more of one factor of production, while holding others constant, will yield progressively smaller increases in output.

Factor of Production

An input used in the production of goods or services, such as land, labor, capital, and entrepreneurship.

Scale

Refers to the size or level of operation, especially in terms of the capacity to produce or serve in business and economics.

Increasing Returns

A situation where an increase in the amount of inputs results in a more than proportional increase in the output, demonstrating enhanced efficiency or productivity.