The shorter the time period that suppliers have to adjust to price changes, the
A) lower will be the price elasticity of supply.
B) higher will be the price elasticity of supply.
C) higher will be the price elasticity of demand.
D) lower will be the price elasticity of demand.

Question

Quizplus · Accepted Answer

The price elasticity of supply measures how much the quantity supplied responds to a change in price. If suppliers have a short time to adjust to price changes, they cannot easily change the amount of the product they produce or supply, making the supply less responsive (or more inelastic) to price changes. Hence, the shorter the adjustment period, the lower the price elasticity of supply.

The Shorter the Time Period That Suppliers Have to Adjust