Choose the statement that correctly describes elasticity of supply for firms over the short run or long run.
Elasticity of Supply
Inelastic Supply
Elastic Supply
S
S
Price
Price
Quantity Supplied
Quantity Supplied
- Elasticity of Supply is a measure of how responsive the quantity supplied of a good or service is to a change in price.
- Inelastic Supply means that the quantity supplied does not change significantly in response to a change in price.
- Elastic Supply means that the quantity supplied changes significantly in response to a change in price.
Therefore, the correct statement describing elasticity of supply for firms over the short run or long run would be:
In the short run, firms may have inelastic supply as they may not be able to quickly adjust their production levels in response to changes in price. In the long run, firms may have more elastic supply as they have more time to adjust their production processes and increase or decrease output.