Given that elasticity of supply changes over time, in the short run an increase in demand will generally cause
A) the quantity exchanged to rise above its long- run equilibrium value.
B) the price to rise to a level below its long- run equilibrium value.
C) the price to rise above its long- run equilibrium value.
D) both price and quantity exchanged to rise above their long- run equilibrium values.
E) supply to change.

Question

Quizplus · Accepted Answer

In the short run, firms may not be able to increase their supply in response to an increase in demand due to production constraints or limited resources. This results in a shortage of the product, causing the price to rise above its long-run equilibrium value until supply catches up with demand in the long run. Therefore, an increase in demand in the short run will generally cause the price to rise above its long-run equilibrium value.

Given That Elasticity of Supply Changes Over Time, in the Short