How does a business that is highly elastic respond to a drop in prices

The more elastic the supply curve, the easier it is for sellers to reduce the quantity sold, instead of taking lower prices. In a market where both the demand and supply are very elastic, the imposition of an excise tax generates low revenue.

Explanation:

Price elasticity of supply measures the responsiveness to the supply of a good or service after a change in its market price. According to basic economic theory, the supply of a good will increase when its price rises. Conversely, the supply of a good will decrease when its price decreases.

How does a business that is highly elastic respond to a fall in prices? A highly elastic firm would redoing to a fall in prices by quickly changing operations. For example, a business might lay off workers, close earlier in the day, or leave the market altogether. Quantity supplied would thus fall quickly.

Explanation:

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