Question

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

Short answer

The larger effect will be on equilibrium quantity.

Step-by-step solution

Step 1. Introduction

Elastic supply curves show that the quantity supplied varies more than proportionally in response to price variations.

Step 2. Explanation

The form of the supply curve determines if a movement in the demand curve leads to a higher corresponding difference in the equilibrium price or the equilibrium quantity. The shift will be predominantly in the equilibrium quantity if the supply curve is relatively flat or elastic. A supply curve that is elastic implies that a minor adjustment in price usually leads to a larger reaction in the quantity given.