Question

6. Markets with elastic supply and demand curves: a) Have demand and supply curves that never intersect. B) Are very sensitive to a change in price. C) Have greater movements in quantity than prices. D) Are very sensitive to a change in quantity. E) Are only theoretical and do not exist in the real world.

Answer 1

The correct statement is B (are very sensitive to change in price)

Explanation:

Option B is correct because of the following reason -:

The degree to which a rise in price affects the quantity demanded or supplied is known as elasticity. In the case of elastic demand and supply, as the price rises, the quantity demanded falls and the quantity supplied rises more than proportionally. Inelastic price elasticity of demand and supply, on the other hand, induces a less than proportional change in quantity as prices change.

Hence , the correct option is B .