The main determinant of the price elasticity of supply is:
A)time
B)the definition of the market
C)the number of close substitutes
D)luxuries versus necessities

Question

Quizplus · Accepted Answer

The main determinant of the price elasticity of supply is time. Over a longer period, producers have more time to adjust their production levels in response to changes in price. In the short run, producers may not be able to adjust their production levels as quickly, so the price elasticity of supply may be lower. Therefore, time is the most important factor in determining the price elasticity of supply. The other factors listed (definition of the market, number of close substitutes, and luxuries versus necessities) are important in determining the price elasticity of demand.

The Main Determinant of the Price Elasticity of Supply Is