A-LevelEconomicsThe price system and the microeconomy9708/12 · Oct/Nov 2017 · Q81 Mark
Over a four year period, as the price of new houses increases, the price elasticity of supply for new houses falls, as shown. All new houses were sold. [Table showing supply of new houses, price of new houses ($) and price elasticity of supply for year 1 to year 4] What shows price elasticity of supply became more inelastic from year to year?
ADollar revenues to house builders declined each year.
BEach year, the government released more land for house building.
CThe proportionate price change was greater than the proportionate supply change.
DThe proportionate price change was the same as the proportionate supply change.
✓ Correct answer
C: The proportionate price change was greater than the proportionate supply change.
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