Suppose that it is extremely inexpensive to acquire additional acres of land to grow bananas. We would then expect that the elasticity of supply of bananas is elastic.

Question

Quizplus · Accepted Answer

When it is inexpensive to acquire additional acres of land to grow bananas, banana producers can quickly increase the quantity supplied in response to any increase in the market price of bananas. This would result in a relatively large percentage change in the quantity supplied for a given percentage change in the price, indicating that the supply of bananas is elastic. Therefore, the statement is true.

Suppose That It Is Extremely Inexpensive to Acquire Additional Acres