5 Questions
Which of the following factors is likely to make the supply of a commodity more inelastic?
Perishable nature of the commodity
What is the main reason why the quantity supplied of a commodity may not change significantly in response to a change in its price in the short period?
Time factor
Which of the following statements is true about the relationship between the cost of production and the elasticity of supply?
The elasticity of supply depends upon the change in the cost of production
What is the effect of the availability of sufficient production facilities on the elasticity of supply?
It makes the supply more elastic
Which of the following factors is likely to make the supply of a commodity more elastic?
Willingness of entrepreneurs to take risk
Study Notes
Determinants of Supply Elasticity
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Perishable goods have a relatively less elastic supply due to their inability to be stored, making it difficult to alter supply in response to price changes.
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The short-term response to a price change is typically small, resulting in a less elastic supply, as output may only change by a small quantity.
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Availability of production facilities, such as power and raw materials, enables producers to increase supply in response to a rise in price, making supply more elastic.
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Changes in the cost of production directly impact the elasticity of supply.
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The nature of inputs used in the production of a commodity influences the elasticity of supply.
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Entrepreneurs who are willing to take risks tend to have a more elastic supply, while those who are risk-averse have a more inelastic supply.
This quiz covers the factors that influence supply elasticity, including the nature of the commodity, time factor, and availability of production facilities.
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