The fundamental determinant of the elasticity of supply is:
A) how many substitute goods exist.
B) the price of the good.
C) how quickly the per-unit cost of production increases with an increase in production.
D) the rate of change of quantity demanded as compared to the quantity supplied.

Question

Quizplus · Accepted Answer

The elasticity of supply depends on how quickly the per-unit cost of production increases with an increase in production. If the per-unit cost of production increases significantly with a slight increase in production, then the supply is considered inelastic; if the per-unit cost of production does not increase significantly even with a significant increase in production, then the supply is considered elastic. The number of substitute goods, the price of the good, and the rate of change of quantity demanded as compared to the quantity supplied are not the determinants of the elasticity of supply.

The Fundamental Determinant of the Elasticity of Supply Is