Which of the following is likely to make supply more inelastic? a The inputs necessary for production cannot readily be increased. b The good is necessary for survival (e. g., a life-saving drug). c The time period under consideration is quite long. d Production technology is easily adjusted to changes in price. e Consumer income is rising.

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Business

Jaslene Yang

28 November, 06:55

Which of the following is likely to make supply more inelastic? a The inputs necessary for production cannot readily be increased. b The good is necessary for survival (e. g., a life-saving drug). c The time period under consideration is quite long. d Production technology is easily adjusted to changes in price. e Consumer income is rising.

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Virginia Wilkinson · Answer 1

Answer: Option A

Explanation: Elasticity refers to the tendency of a commodity under which its supply increase or decrease with the change in price. Thus, if the supply is inelastic then it means the change in price will not affect the supply.

If the goods that are necessary for production are not available in the market at a short notice than a change in price would not affect the supply as the supplier will not be able to increase his production or sell whatsoever.

Hence the correct option is A.