The change in price that results from a rightward shift in demand will be greater ifGroup of answer choicesthe supply curve is horizontal than if the supply curve is upward sloping.the supply curve is relatively steep than if the supply curve is relatively flat.the supply curve is upward sloping than if the supply curve is vertical.the supply curve is horizontal than if the supply curve is vertical.
Question
The change in price that results from a rightward shift in demand will be greater ifGroup of answer choicesthe supply curve is horizontal than if the supply curve is upward sloping.the supply curve is relatively steep than if the supply curve is relatively flat.the supply curve is upward sloping than if the supply curve is vertical.the supply curve is horizontal than if the supply curve is vertical.
Solution
The change in price that results from a rightward shift in demand will be greater if the supply curve is relatively steep than if the supply curve is relatively flat.
Here's why:
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A rightward shift in demand means that at every price, consumers want to buy more of the good. This could be due to a variety of factors, such as an increase in income, a change in tastes, or an increase in the price of a substitute good.
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If the supply curve is relatively flat (or horizontal), this means that suppliers are willing and able to produce a lot more of the good at the current price. So even if demand increases, the price won't go up by much because suppliers can easily increase their production to meet the higher demand.
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On the other hand, if the supply curve is relatively steep (or vertical), this means that suppliers can't easily increase their production, even if the price goes up. So if demand increases, the price will have to go up a lot to bring the quantity demanded back down to the quantity supplied.
So, the correct answer is "the supply curve is relatively steep
Similar Questions
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