Question:

Two firms, X and Y, are operating in a perfectly competitive market. The price elasticity of supply of X and Y are respectively 0.5 and 1.5. Then

Updated On: Oct 1, 2024
  • if the market price increases by 1 %, X supplies 0.5 % less quantity
  • Y experiences a slower increase in marginal cost in comparison to X
  • if market price increases by 0.5 %, X supplies 1 % more quantity
  • Y experiences a rapid increase in marginal cost in comparison to X
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The Correct Option is B

Solution and Explanation

The correct option is (B): Y experiences a slower increase in marginal cost in comparison to X
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