Question

If demand is elastic, will shifts in supply have a larger effect on equilibrium quantity or on price?

Short answer

The shift in supply curve will change the equilibrium quantity more than the price.

Step-by-step solution

Step 1. Definition

Elasticity is a microeconomic measure of the connection between changes in quantity demanded and pricing. It can be measured by percentage changes or by looking at revenue change.

Step 2. Explanation

When the demand curve is elastic it means it would be relatively flatter. The equilbrium quantity and price, as we know, is determined by interaction of demand and supply. With flatter curve, when supply shifts, a change in price would cause more than proportionate change in quantity. So, the larger effecct would be on equilibrium quantity.