ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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relatively inelastic while the supply of manufactured goods is relatively elastic.
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relatively elastic while the supply of manufactured goods is relatively inelastic.
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Either A or B
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None of the above
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Detailed explanation-1: -The supply of agricultural products is generally inelastic that means proportionate change in quantity demand is lesser than the proportionate change in price as agricultural products are necessities since it provides basic subsistence to people.
Detailed explanation-2: -Once a crop is seeded, for example, farmers have limited ability to alter the quantities they put on the market. Therefore, in the short-term, market supply is relatively inelastic or unresponsive.
Detailed explanation-3: -Production of agricultural commodities depends on natural factors such as rainfall climatic conditions etc. Due to unforeseen changes in weather the agricultural productions is low then their supply cannot be increased even at a higher price. As a result the supply of agricultural commodities is relatively inelastic.
Detailed explanation-4: -Manufactured goods are elastic in supply because supply can be adjusted easily. They are non-perishable, any excess supply can be stored and subsequently released when demand rise again.