Suppose that the demand curve for tin is highly inelastic. If the supply curve of tin decrease and increase cyclically along the demand curve for tin then in this market the size of the price fluctuation will be __________ the size of the quantity fluctuations?
Correct answer: A. relatively greater then
- A. relatively greater then
- B. relatively less than
- C. the same as
- D. any of the above
Explanation
With highly inelastic demand, a change in supply produces a relatively large price response but only a small quantity response. Therefore, price fluctuations are relatively greater than quantity fluctuations.
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