If the supply of a product is elastic, a small reduction in price will
- reduce the cost of production
-
reduce the quantity supplied
- increase the quantity supplied
- lead to no change in the quantity supplied
The correct answer is: B
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.