Which of the following statements is CORRECT with respect to price elasticity of supply?
A) The price elasticity of supply tends to be greater as new firms can easily enter the market.
B) The price elasticity of supply tends to be greater as expanding existing production facilities is less costly.
C) The price elasticity of supply tends to be smaller as firms have limited production facilities.
D) All of the above are correct.

Question

Quizplus · Accepted Answer

All the statements correctly describe factors that influence the price elasticity of supply. A) highlights the impact of market entry ease on supply elasticity. B) notes how lower costs of expanding production affect elasticity. C) points out how limited production capacity can decrease elasticity.

Which of the Following Statements Is CORRECT with Respect to Price