Asked by Mustapha Mohammed on May 10, 2024
Verified
What is the key difference between the short-run and long-run in terms of elasticity of supply?
A) Fixed productive capacity
B) Labor changes
C) No changes can be made to capital or labor
D) No difference
Elasticity of Supply
A measure of how much the quantity supplied of a good changes in response to a change in its price.
Productive Capacity
The maximum output a company or economy can produce with its current resources and technology, without causing inflation.
Labor Changes
Adjustments in the workforce, including alterations in the number of workers, the quality of labor, or employment conditions.
- Differentiate between short-run and long-run elasticity of supply.
Verified Answer
FI
Februnia IshakMay 14, 2024
Final Answer :
A
Explanation :
The key difference between the short-run and long-run in terms of elasticity of supply is that in the short-run, the productive capacity of the firm is fixed, while in the long-run, the firm can adjust its productive capacity by changing its capital inputs. Therefore, the firm's supply is typically more elastic in the long-run than in the short-run. Option A) Fixed productive capacity is the correct answer.
Learning Objectives
- Differentiate between short-run and long-run elasticity of supply.