The most important determinant of price elasticity of supply is
A)price elasticity of demand
B)technological conditions such as how rapidly costs increase when a firm increases its output
C)whether the production process relies heavily on capital or on labor
D)the number and closeness of available substitutes
E)whether the product is a normal good or an inferior good

Question

Quizplus · Accepted Answer

Technological conditions such as how rapidly costs increase when a firm increases its output are the most important determinant of price elasticity of supply. If a firm can easily and quickly increase its output without incurring greatly increased costs, the supply will be more elastic. However, if a firm incurs significantly higher costs when it increases its output, the supply will be less elastic.

The Most Important Determinant of Price Elasticity of Supply Is