The derived demand curve for a product component will be more inelastic

A) the larger is the fraction of total cost going to this component.

B) the more inelastic is the demand curve for the final product.

C) the more elastic are the supply curves of cooperating factors.

D) the less essential is the component in question.

Question

Mathematics

Joan

4 November, 05:39

The derived demand curve for a product component will be more inelastic

A) the larger is the fraction of total cost going to this component.

B) the more inelastic is the demand curve for the final product.

C) the more elastic are the supply curves of cooperating factors.

D) the less essential is the component in question.

+5

Answers (1)

Know the Answer?

Bailey Simon · Answer 1

B. the more inelastic is the demand for the final product.

Explanation:

Inelastic demand occurs when demand rises by a lower percentage as compared to the percentage of the price drop.

Take for instance, if price drops by 10% and then demand only rises by 4%.

Now, the derived demand curve for a product component will be more inelastic when there's more rises by lower percentages of the final product than price drop. The more inelastic the demand for a product is, the more inelastic the demand derive curve will be.