Sia
Question
Microeconomics
Posted 9 months ago
Which of the following would make price elasticity of supply more inelastic
Choose 1 answer:
(A) Resources can easily be switched between the production of different goods
(B) Resources are easily substitutable with each other
(C) A longer time frame
(D) Inputs to production are hard to obtain
(E) It is the long run
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Answer from Sia
Posted 9 months ago
Solution
a
Definition of Price Elasticity of Supply: Price elasticity of supply (PES) measures how much the quantity supplied of a good responds to a change in the price of that good
b
Inelastic Supply: When the supply is inelastic, the quantity supplied does not change much with a change in price. This typically happens when inputs to production are hard to obtain
c
Answer Analysis: Among the given options, the one that would make the price elasticity of supply more inelastic is when inputs to production are hard to obtain. This is because it limits the ability of producers to increase production in response to price changes
Answer
(D) Inputs to production are hard to obtain
Key Concept
Price Elasticity of Supply
Explanation
The price elasticity of supply becomes more inelastic when inputs to production are hard to obtain because it restricts the ability of producers to adjust the quantity supplied in response to price changes.
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