If the supply of a product is elastic, a small reduction in price will
A. reduce the cost of production B. reduce the quantity supplied C. increase the quantity supplied D. lead to no change in the quantity supplied
Correct Answer: B
Explanation
Elastic demand means a change in price would cause a change in the quantity demanded. In an elastic demand, a small reduction in price would increase the quantity demanded and a decrease in the quantity supplied. This is so because, suppliers will not be willing to supply much goods when the price for it is low.
