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:

Annual Installment

A fixed amount of money paid back to a lender once a year, typically used in the repayment of long-term loans.

Face Value

The nominal or dollar value stated on a financial instrument, such as a bond or stock certificate.

Bond Issue

The process of offering bonds for sale to investors as a way of borrowing money for long-term capital needs.

Interest Payable

The amount of interest expense that has been incurred but not yet paid by the company.