Final answer:
An increase in demand increases equilibrium price more with less elastic supply than with more elastic supply, as producers cannot as easily meet new demand without raising prices. The correct answer is option C.
Step-by-step explanation:
An increase in demand will increase the equilibrium price to a greater extent the less elastic the supply curve. When we consider how a change in demand affects equilibrium price, the concept of supply elasticity is essential. If supply is inelastic, which means producers cannot easily change the quantity supplied in response to price changes.
Then an increase in demand will lead to a larger increase in equilibrium price because the quantity supplied does not increase enough to meet the new demand. However, when supply is elastic, producers can increase output without a significant increase in price, which means the equilibrium price will not rise as much.
The nature of the good being normal or inferior is not directly relevant to this particular scenario.