Question

a. what factors determine the elasticity of resource demand? multiple choice A. income of buyers in the market and the ratio of resource costs to total revenues B. ease of resource substitutability, elasticity of product demand, and the ratio of resource costs to total costs C. elasticity of product supply and the price of the resource D. elasticity of product supply, the ratio of resource costs to total revenues, and the income of buyers in the market b. what effect will each of the following have on the elasticity or the location of the demand for resource c, which is being used to produce commodity x?I. An Increase In the demand for product X:ii. An increase in the price of substitute resource D: ill. An increase in the number of resources substitutable for C in producing X: iv. A technological improvement in the capital equipment with which resource C is combined: v. A fall in the price of complementary resource E:vi. A decline in the elasticity of demand for product X due to a decline in the competitiveness of product market X:

Answer 1

The elasticity of resource demand is determined by the ease of resource substitutability, the elasticity of product demand, and the ratio of resource costs to total costs. Hence, the correct answer to the multiple-choice question would be option B.

Changes in the demand for end products, prices of substitute and complementary resources, technological changes, and market competitiveness affect the demand and elasticity of resources used in production.

Step-by-step explanation:

The factors that determine the elasticity of resource demand include the ease of resource substitutability, elasticity of product demand, and the ratio of resource costs to total costs. Hence, the correct answer to the multiple-choice question would be option B.

Regarding the effects on the elasticity or location of the demand for resource c, here are the impacts:

• An increase in the demand for product X will likely increase the demand for resource C, improving its elasticity.
• An increase in the price of substitute resource D will likely make resource C more demanded if C and D are close substitutes, possibly increasing C's elasticity.
• An increase in the number of resources substitutable for C in producing X will likely reduce the demand and elasticity of resource C.
• A technological improvement in the capital equipment with which resource C is combined might either increase or decrease the demand and elasticity for C, depending on whether the technology makes C more effective or less necessary.
• A fall in the price of complementary resource E could increase the demand for resource C if using E requires more of C, thereby affecting C's elasticity.
• A decline in the elasticity of demand for product X due to a decline in the competitiveness of the product market X can reduce the demand for resource C and its elasticity.