A key determinant of the price elasticity of supply is the
A) number of close substitutes for the good in question.
B) definition of the market.
C) length of the time period.
D) extent to which buyers alter their quantities demanded in response to changes in their incomes.

Question

Quizplus · Accepted Answer

The length of the time period is a key determinant of the price elasticity of supply because producers may not be able to adjust their production immediately in response to changes in price. In the short run, production may be relatively fixed, leading to a less elastic supply curve. In the long run, producers have more time to adjust their production levels, leading to a more elastic supply curve. The number of close substitutes for the good, the definition of the market, and changes in buyers' incomes are more likely to affect the price elasticity of demand rather than the price elasticity of supply.

A Key Determinant of the Price Elasticity of Supply Is