Which of the following statements best describes the relationship between short-run supply elasticity and long-run supply elasticity?
A) For many products, long-run supply is likely to be more price elastic than short-run supply.
B) For products that can be recycled, long-run supply is likely to be more price elastic than short-run supply.
C) For many products, long-run supply is likely to be less price elastic than short-run supply.
D) Both a) and b) are generally true, but c) is generally false.

Question

Quizplus · Accepted Answer

In the short run, firms may have limited ability to adjust their production levels or the size of their facilities, and therefore their supply of goods and services may be relatively inelastic (i.e. less responsive to changes in price). However, in the long run, firms have more flexibility to adjust their production capacity, enter or exit the market, and switch to alternative inputs, which makes their supply more elastic. Therefore, for many products, long-run supply is likely to be more price elastic than short-run supply. Option B is incorrect because the ability to recycle a product does not necessarily affect the elasticity of supply. Option C is incorrect because long-run supply can be more elastic than short-run supply in many cases. Option D is partially true, but option C is not generally false.

Which of the Following Statements Best Describes the Relationship Between