Which of the following is a determinant of both price elasticity of supply and price elasticity of demand?
A) Availability of inputs
B) Flexibility of the production process
C) Adjustment time
D) Degree of necessity

Question

Quizplus · Accepted Answer

Adjustment time is a determinant of both price elasticity of supply and price elasticity of demand. It refers to the amount of time it takes for suppliers and consumers to respond to changes in price. If the adjustment time is short, the elasticity is high, as suppliers and consumers can quickly adjust their behavior in response to price changes. If the adjustment time is long, the elasticity is low, as suppliers and consumers will take longer to adjust to price changes. The other options - availability of inputs, flexibility of the production process, and degree of necessity - are determinants of price elasticity of supply, but not necessarily of price elasticity of demand.

Which of the Following Is a Determinant of Both Price