ECONOMICS
MARKET FAILURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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What makes the supply of a product more elastic?
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It is a necessity and with no substitutes.
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It cannot be stored easily and costlier to store.
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It can be produced easily in less time.
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Altering cost of the product is high.
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Explanation:
Detailed explanation-1: -3) Number of producers: The more producers available to produce an output, the easier supply can be increased. Supply becomes more elastic as the number of producers increases.
Detailed explanation-2: -Supply is elastic if there are large changes in supply for a small change in price. If the percentage change in price is equal, though opposite, to the percentage change in quantity, then supply elasticity is unit elastic.
Detailed explanation-3: -Time. Over time price elasticity of supply tends to become more elastic, which means that producers would increase the quantity supplied by a larger percentage than an increase in price.
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