ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Supply is normally more elastic in the long run than in the short run for produced goods, since it is generally assumed that in the long run all factors of production can be utilized to increase supply, whereas in the short run only labor can be increased, and even then, Page 2 changes may be prohibitively costly.

Detailed explanation-2: -Elasticities are often lower in the short run than in the long run. Changes that just aren’t possible to make in a short amount of time are realistic over a longer time frame. On the demand side, that can mean consumers eventually make lifestyle choices-like buying a more fuel efficient car to reduce their gas usage.

Detailed explanation-3: -The price elasticity of demand and that of supply are both likely to be greater in the long run because consumers and producers have more flexibility in the long run. Consumers could adjust their choice of consumption more flexibly in the long run by finding better alternatives to the current choice.

Detailed explanation-4: -Supply could be elastic for the following reasons If there is spare capacity in the factory. If there are stocks available. In the long run, supply will be more elastic because capital can be varied. If it is easy to employ more factors of production.