Suppose that the supply curve of tin is highly inelastic. If the demand curve of tin decrease and increase cyclically along the supply curve of tin, then in this market the size of the quantity fluctuation will bathe size of the price fluctuations ?
Correct answer: B. relatively less than
- A. relatively greater than
- B. relatively less than
- C. the same as
- D. Any of the above
Explanation
With highly inelastic supply, demand shifts produce relatively large price changes but relatively small quantity changes. Therefore, quantity fluctuations are relatively less than price fluctuations, making b correct.
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