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A-Level Economics · Shift in supply diagram question

EVALUATION: demand for this good is price INELASTIC. What does that mean for the same rightward supply shift?

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The diagram

The answer

Price falls a lot but quantity barely rises. Steeper demand curve, same shift: the price does the moving and the quantity barely responds. Draw it steep and the examiner can see you know why. A steeper (inelastic) demand curve means quantity demanded responds proportionately less than price. So the same rightward supply shift drives price down sharply while quantity crawls up — and because the fall in price outweighs the gain in quantity, total revenue (P × Q) falls. That is the revenue box getting smaller.

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This is one of 6 questions on the shift in supply diagram — every corner lettered, every wrong answer diagnosed.

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