In which of the following cases is the elasticity of supply for a good likely to be high?
A) The ﬁxed cost of producing the good is very high.
B) The ﬁrm is operating with excess capacity.
C) The good has a large number of substitutes.
D) The market price of the good is very high.

Question

Quizplus · Accepted Answer

The elasticity of supply is high when firms can easily adjust their production levels in response to price changes. If a firm is operating with excess capacity, it means it can increase production without significant increases in cost, making the supply more elastic.

In Which of the Following Cases Is the Elasticity of Supply