Question

Like many other​ cities, Denver experienced a sharp decline in construction of new houses in the years following 2006. Many​ carpenters, roofers, and other skilled workers left the area or found jobs in other industries. In​ addition, builders stopped buying and preparing home lots for construction. According to an article in the Wall Street Journal​, by​ 2014, as consumers increased their demand for new homes in​ Denver, "New-home prices have surged over the past two years ... amid a shortage of home lots and skilled construction​ workers." ​Source: Kris​ Hudson, "Labor Shortage Besets Home​ Builders," Wall Street Journal​, May​ 1, 2014. In the​ future, the price increases of new houses in Denver can be expected to be
A.smaller because supply is less elastic over time.
B.larger because supply is more elastic over time.
C.smaller because supply is more elastic over time.
D.larger because supply is less elastic over time.

Answer 1

Answer:

smaller because supply is more elastic over time

Explanation:

Elasticity of supply is measured as the ratio of proportionate change in the quantity supplied to the proportionate change in price. High elasticity indicates the supply is sensitive to changes in prices, low elasticity indicates little sensitivity to price changes, and no elasticity means no relationship with price