Which of the following statements is correct?
A) Supply is more elastic in the short run than in long run.
B) Supply is more elastic in the long run than in short run.
C) Price elasticity of supply is constant along the supply curve.
D) Price elasticity of supply is always a negative number.

Question

Quizplus · Accepted Answer

In the short run, producers are limited in their ability to increase production due to fixed inputs such as factory space or specialized labor. In the long run, however, these inputs can be adjusted, allowing for a more flexible response to changes in price. Therefore, supply is more elastic in the long run than in the short run.

Answer: C
 Price elasticity of supply is calculated as the percentage change in quantity supplied divided by the percentage change in price. This holds true regardless of where on the supply curve the price and quantity are located. Therefore, price elasticity of supply is constant along the supply curve.

Answer: D 
 Price elasticity of supply can be either positive or negative, depending on the direction of the change in price and quantity supplied. However, regardless of the sign, the value of price elasticity of supply is always a positive number.

Which of the Following Statements Is Correct