Question

The main determinant of elasticity of supply is the: A. number of close substitutes for the product available to consumers. B. amount of time the producer has to adjust inputs in response to a price change. C. urgency of consumer wants for the product. number of uses for the product.

Answer 1

Answer:

B. amount of time the producer has to adjust inputs in response to a price change.

Explanation:

• When talking about elasticity of supply, we are refering to the sensibility of quantity produced when price changes.
• If price increases, producers have an incentive to increase the quantity they offer. This will be conditioned by the productive process they face.
• If it  is relatively easy to increase output when facing an increase in prices  elasticity of supply would be relatevely high.
• If it is relatively difficult or slow to increase output (think about real assets for example, their production takes more time than produceing candies), facing an increase in prices would not inmediately increase offered quantities. In this case elasticity of supply would be relatively low.
• Then, the amount of time represents a crucial aspect when thinking about how supply can change when prices changes, conditioning the value of elasticity of supply.