-Short-run and long-run supply curves are depicted in Exhibit D-3. Which of the following statements is true? A) Supply curve S₁ is the long-run supply curve. B) Supply curve S₁ is more elastic than supply curve S₂. C) Supply curve S₂ is more elastic than supply curve S₃. D) Supply curve S₃ is the long-run supply curve. E) Supply curve S₃ is less elastic than supply curve S₂.

Question

Quizplus · Accepted Answer

In the long run, supply curves are typically more elastic because firms can adjust all inputs and enter or exit the market. Therefore, S₃ being the long-run supply curve is consistent with this characteristic.

-Short-Run and Long-Run Supply Curves Are Depicted in Exhibit D-3