A. reduce the cost of production
B. reduce the quantity supplied
C. increase the quantity supplied
D. lead to no change in the quantity supplied
Correct Answer:
Option B – reduce the quantity supplied
Explanation
Elastic demand means a change in price would cause a change in the quantity demanded. In an elastic demand, a small reduction in price would increase the quantity demanded and a decrease in the quantity supplied. This is so because, suppliers will not be willing to supply much goods when the price for it is low.
