question if the price elasticity of demand is such that a 3% rise in prices leads to a 1% decrease in…

question if the price elasticity of demand is such that a 3% rise in prices leads to a 1% decrease in quantity demanded while the price elasticity of supply is such that a 3% rise in prices leads to a 5% increase in quantity supplied, then which of the following will be a consequence if a key input cost rises? select the correct answer below. producers face greater costs than consumers from production savings. increases in key input costs are more detrimental to producers than consumers. increases in production costs must be absorbed by producers. increases in production costs can largely be passed along to consumers.

question if the price elasticity of demand is such that a 3% rise in prices leads to a 1% decrease in quantity demanded while the price elasticity of supply is such that a 3% rise in prices leads to a 5% increase in quantity supplied, then which of the following will be a consequence if a key input cost rises? select the correct answer below. producers face greater costs than consumers from production savings. increases in key input costs are more detrimental to producers than consumers. increases in production costs must be absorbed by producers. increases in production costs can largely be passed along to consumers.

Answer

Brief Explanations:

When the price - elasticity of demand is inelastic (a 3% rise in price leads to a 1% decrease in quantity demanded) and the price - elasticity of supply is elastic (a 3% rise in price leads to a 5% increase in quantity supplied), producers have more flexibility. When a key input cost rises, producers can pass on the cost increase to consumers because consumers are less responsive to price changes (inelastic demand) and producers can adjust supply more easily (elastic supply).

Answer:

Increases in production costs can largely be passed along to consumers.