Question

Explain why the supply of an item with a large number of production substitutes will likely have an elastic supply

Answer 1

Answer - If the product has a greater number of substitutes in the market , then the supply of the product will be likely to be more elastic. This is because , the changes in price will lead to the change in quantity supplied for one product. The supplier if finding the substitute product will shift his supply over the other product. If this substitute was not there , the supply of the product would not have changed.

Hence this fact is proved that presence of the large number of substitutes leads to the elastic nature of the supply.