Which factor is the most important in determining the price elasticity of supply?
A) the number of close substitutes
B) the time period the producer has to adjust inputs and outputs
C) the intensity of the need on behalf of consumers
D) the number of alternative uses of the good

Question

Quizplus · Accepted Answer

The time period the producer has to adjust inputs and outputs is the most important factor in determining the price elasticity of supply. In the short run, production cannot easily be changed and so supply is inelastic. In the long run, it is easier to adjust production, so supply becomes more elastic. This aspect is not captured in the other options.

Which Factor Is the Most Important in Determining the Price