Economics · Price Elasticity of Supply
Which of the following statements most accurately explains why the time period is considered the most critical determinant of the Price Elasticity of Supply?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Supply becomes significantly more elastic in the long run because producers have the flexibility to change all inputs, including plant size.✓
- 2In the immediate market period, supply elasticity is infinite because producers can quickly release all stored inventory to clear the market.
- 3Supply becomes highly inelastic in the long run because technological advancements reduce the need for variable inputs.
- 4In the short run, supply is perfectly elastic as firms can immediately alter their plant size to accommodate price changes.
Correct answer
Supply becomes significantly more elastic in the long run because producers have the flexibility to change all inputs, including plant size.
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