In the short run when production inputs are fixed, the elasticity of supply tends to be

In the short run when production inputs are fixed, the elasticity of supply tends to be

• A. Perfectly elastic.
• B. Unit elastic.
• C. Elastic.
• D. Extremely inelastic.

Answer: (D)

In the short run, some production inputs are fixed, like capital equipment or plant size. Because these inputs can’t be adjusted quickly, a change in price doesn’t lead to a large change in how much can be produced. Firms can only vary the use of inputs that can change more readily, and there’s a limit to how much output they can add in the short run. That makes the quantity supplied respond very little to price changes, i.e., the supply is extremely inelastic. In the long run, all inputs are adjustable, so supply becomes more responsive. The other terms imply greater responsiveness than is possible with fixed capacity, so they don’t fit the short-run situation.

In the short run, some production inputs are fixed, like capital equipment or plant size. Because these inputs can’t be adjusted quickly, a change in price doesn’t lead to a large change in how much can be produced. Firms can only vary the use of inputs that can change more readily, and there’s a limit to how much output they can add in the short run. That makes the quantity supplied respond very little to price changes, i.e., the supply is extremely inelastic. In the long run, all inputs are adjustable, so supply becomes more responsive. The other terms imply greater responsiveness than is possible with fixed capacity, so they don’t fit the short-run situation.