Introduction to Economics 1 Deneme Sınavı Sorusu #1278543

Which of the following is true regarding the price elasticity of supply?


Supply is more elastic in the short-run than in the long-run.

The higher the availability of inputs for production, the higher the elasticity of supply.

The price elasticity of supply is smaller in the long-run than in the short-run

The more easily sellers can change the quantity they produce due to availability of inputs, the smaller the price elasticity of supply.

The supply of beachfront property in Istanbul Bosporus or Mediterranean coasts is
harder to vary and thus more elastic than the supply of new cars or computers.


Yanıt Açıklaması:

The higher the availability of inputs for production, the higher the elasticity of supply.
For example, the supply of beachfront property in Istanbul Bosporus or Mediterranean coasts is harder to vary and thus less elastic than the supply of new cars or computers.
Supply is more elastic in the long-run than in the short-run.

The more easily sellers can change the quantity they produce due to availability of inputs, the greater the price elasticity of supply. Also, the price elasticity of supply is greater in the
 long-run than in the short-run, because firms can build new factories to extend their plant size, or new firms may be able to enter the market.

Answer is B.

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