PRC-3 · Chapter 11 · Question 23 of 57
Which of the following factors would make the price elasticity of supply for a manufactured product highly elastic?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) The firm has a large amount of spare, unused factory capacity
Explanation
If a firm has spare capacity, it can rapidly and easily increase production in response to a price increase, making its supply highly elastic.
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