The most important determinant of price elasticity of supply is
A) the number of close substitutes there are for the good.
B) the time period firms have to adjust to the new price.
C) the price of the good.
D) the importance of the good in the budgets of consumers.

Question

Quizplus · Accepted Answer

The time period available for adjustment is the most important determinant of price elasticity of supply, as it determines how easily and quickly producers can change their production capacity in response to changes in price. Other factors, such as the availability of substitutes, also play a role, but are secondary to the time period available for adjustment. The price of the good itself and the importance of the good in consumers' budgets are more relevant for determining the price elasticity of demand.

The Most Important Determinant of Price Elasticity of Supply Is