Question

From the menu, select the answer that corresponds to the following statement: In terms of price elasticity of supply, the longer the time allowed for adjustment, the more

________ the supply curve

Fill the blank,

A) likely there will be no change in elasticity of

B) vertical

C) inelastic

D) elastic  

Answer 1

Option D

• In terms of price elasticity of supply, the longer the time allowed for adjustment, the more elastic the supply curve.
• The price elasticity of supply is more elastic in the long run because when greater time is allotted for the suppliers they find it easy to shift the resources among different products with respect to the changing prices.
• This is because the amount supplied greatly depends upon the changes in prices of goods and services while the price elasticity of supply is greatly influenced by the time allotted for each supply.