Final answer:
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.