A firm calculates that the price elasticity of supply for its product is 0.4. Would this figure be a cause for concern for the firm?
- ANo, as it implies that the firm will be able to raise revenue by raising price.
- BNo, as it suggests there are few substitutes for the product.
- CYes, as it means that demand for its product is increasing at a slow rate.
- DYes, as it shows that the firm is not able to adjust supply easily when demand changes.