Question

True/False

a. The greater the elasticity of supply, the greater the gains from trade.
b. If supply is perfectly inelastic, the fall in consumer surplus would exceed the rise in producer surplus.
c. Producers can still benefit from trade even if supply is perfectly inelastic.

Answer 1

a. The greater the elasticity of supply, the greater the gains from trade. TRUE

b. If supply is perfectly inelastic, the fall in consumer surplus would exceed the rise in producer surplus. FALSE

c. Producers can still benefit from trade even if supply is perfectly inelastic. TRUE

Hope this helps

--Jay