Price Elasticity and Surplus
Can anyone explain why increasing supply and demand elasticities will reduce surplus??? Many thanks!!!
January 19th, 2009 in
CFA - LEVEL 1, Question Posted by CH
Can anyone explain why increasing supply and demand elasticities will reduce surplus??? Many thanks!!!
The higher the elasticities, the more horizontal the demand and supply curves. So the area enclosed by the demand and supply curves reduces, so the surplus reduces…