Question

A good is more elastic when *

a. it is easy to produce more at the same cost

b. it is made from rubber

c. it is difficult to produce more at the same cost

d. the marginal cost is equal to the price

Answer 1

Since the elasticity of supply can be defined as the measurement of the degree of the responsiveness of the quantity supply due to the change in the price level.

Price elasticity of supply= % change in the quantity supply/ % change in the price

In the short-run elasticity of supply is inelastic because in short-run some factors are fixed and some are variables. But in the long-run all factors of production are variable. Hence in the long-run supply curve becomes relatively elastic compare to short-run. This is because for producing more, more inputs are required that cannot be increased suddenly.

When a good is more elastic supply, it means that the responsiveness of the producers are more due to change in the price.

Hence it can be said that a good is more elastic when it is easy to produce more at the same cost. This is because if price increases, then production can be increased at the same cost and it is easy to produce more at higher price.

Hence option a is the correct answer.