PRC-3 · Chapter 11 · Question 9 of 57
Why is the price elasticity of supply generally much higher (more elastic) in the 'Long Run' compared to the 'Very Short Run'?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Because in the short run, firms cannot quickly build new factories or expand major capital to increase production
Explanation
Supply is highly inelastic in the immediate short run because firms are constrained by fixed capacity. In the long run, they can adjust all resources (build new plants), making supply much more elastic.
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