A leftward shift in the supply curve of product X will increase equilibrium price to a greater extent the:Multiple Choicemore elastic the supply curve.larger the elasticity of demand coefficient.more elastic the demand for the product.more inelastic the demand for the product.
Question
A leftward shift in the supply curve of product X will increase equilibrium price to a greater extent the:Multiple Choicemore elastic the supply curve.larger the elasticity of demand coefficient.more elastic the demand for the product.more inelastic the demand for the product.
Solution
The correct answer is: "more inelastic the demand for the product."
Here's why:
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A leftward shift in the supply curve of a product indicates a decrease in supply. This could be due to various factors such as increased production costs, a decrease in the number of suppliers, etc.
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When supply decreases, the equilibrium price (the price at which the quantity demanded equals the quantity supplied) generally increases.
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However, the extent of this price increase also depends on the elasticity of demand for the product. Elasticity of demand measures how responsive the quantity demanded of a good is to a change in its price.
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If demand is elastic, consumers are very responsive to changes in price. So, if the price increases (due to the decrease in supply), the quantity demanded will decrease significantly, potentially preventing the price from rising too much.
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On the other hand, if demand is inelastic, consumers are not very responsive to changes in price. So, even if the price increases, the quantity demanded may not decrease by much. This allows the price to increase to a greater extent.
Therefore, a leftward shift in the supply curve of product X will increase the equilibrium price to a greater extent the more inelastic the demand for the product.
Similar Questions
When a demand curve shifts to the rightMultiple Choicedemand has increased, so equilibrium price increases, and equilibrium quantity increases.demand has decreased, so equilibrium price decreases, and equilibrium quantity decreases.demand has increased, so supply also shifts to the right, and the equilibrium price increases.demand has decreased, so supply also shifts to the right, and the equilibrium price decreases.
Market EquilibriumSuppose both the supply and demand curves shift to the right. What would be the ultimate impact on the price of the product?The price will increase.The price will decrease.The price will remain the same.The price will depend on the magnitude of change in the demand and supply.
A leftward shift of a supply curve would result from:lower production costs.an increase in the price of an alternative product that could be produced with the same resources.a decrease in the price of the product.more sellers of the product.
If the demand curve for a good is horizontal and the price is positive, then a leftward shift of the supply curve results inGroup of answer choicesa price of zero.an increase in price.a decrease in price.no change in price.
Demand is inelastic ifChoose one optiona leftward shift of the supply curve raises the total revenuelarge shifts of the supply curve lead to only small changes in pricethe good in question has close substitutesthe smaller angle between the vertical axis and the demand curve is less than 45 degrees
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