Which of the following is the most important determinant of the elasticity of supply of a good?
A)The number of uses of the good
B)The availability of close substitutes of the good
C)The amount of time producers have to adjust their behavior in response to a price change
D)The percentage of income spent on the good by consumers
E)The availability of complementary goods

Question

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 of a good. In the short run, producers are unable to adjust their behavior, therefore, supply is relatively inelastic. However, in the long run, producers can adjust their production processes, enter or exit the industry, and find substitutes for inputs, resulting in more elastic supply.

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