Question

In: Economics

if export supply is inelastic, it means exporters can change their production __when world prices change....

if export supply is inelastic, it means exporters can change their production __when world prices change.

A. a little B. by a fixed percentage C.by a fixed amount D. a lot

Solutions

Expert Solution

Inelastic export supply means that export supply elasticity is less than 1 .

This means that  

Percentage change in export supply / Percentage change in World Price < 1

This means that , Percentage change in export supply <  Percentage change in World Price .

So this means that when a percentage change in world price happens , then percentage change in export supply is less than or little as compared to percentage change in world price .

Hence (A) part is a correct answer


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