Generally, Long-Run Elasticities of Supply Are

question 138

Multiple Choice

Generally, long-run elasticities of supply are:

• A) greater than short-run elasticities, because existing inventories can be exploited during shortages.
• B) greater than short-run elasticities, because consumers have time to find substitutes for the good.
• C) greater than short-run elasticities, because firms can make alterations to plant size and input combinations to be more flexible in production.
• D) smaller than short-run elasticities, because the firm has made long-term commitments it cannot easily modify.
• E) the same as short-run elasticities, because technology is not assumed to change in the long-run adjustment process.

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Definitions:

Intrinsic Value

The actual, inherent worth of an asset or company, not necessarily matching its current market value.

Zero-Coupon Bond

A debt security that does not pay interest but is traded at a deep discount, rendering profit at maturity when the bond is redeemed for its full face value.

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A bond's yearly interest payout rate, described as a percentage of its face value.

Coupon Rate

The annual interest rate paid on a bond's face value, indicating the amount of periodic payments to the bondholder.