Which of the following is the most important determinant of the elasticity of supply?
A)The number of uses for the product.
B)The number of close substitutes to the product available to consumers.
C)The amount of time producers have to adjust their behavior in response to a price change.
D)The percentage of their incomes consumers spend on the product.

Question

Which of the following is the most important determinant of the elasticity of supply?
A)​The number of uses for the product.
B)​The number of close substitutes to the product available to consumers.
C)​The amount of time producers have to adjust their behavior in response to a price change.
D)​The percentage of their incomes consumers spend on the product.

Quizplus · Accepted Answer

The amount of time producers have to adjust their behavior in response to a price change is the most important determinant of the elasticity of supply. The longer the time period, the easier it is for producers to adjust their production levels and hence the supply can become more elastic. In the short term, producers may not be able to adjust their production levels, making the supply inelastic. The number of uses for the product, the number of close substitutes, and the percentage of consumer's income spent on the product are also factors that influence the elasticity of supply, but they are not as significant as the time horizon.

Which of the Following Is the Most Important Determinant of the Elasticity