PRC-3 · Chapter 11 · Question 53 of 57
In the short run, a factory's physical plant capacity is fixed, but it can slightly increase production by paying workers overtime. Therefore, the price elasticity of supply in the short run is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Relatively inelastic
Explanation
Because firms are constrained by fixed factory sizes in the short run, they cannot massively scale up supply in response to price spikes, making supply relatively unresponsive (inelastic).
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