Recall the Application About the Short-Run and Long-Run Elasticity of Supply

question 159

Multiple Choice

Recall the application about the short-run and long-run elasticity of supply of milk.If the price of milk increases by 20%,in the short run the quantity of milk supplied will increase by only 2% and in the long run it will increase by 50 %.Why is supply more price-elastic in the long run?

• A)Dairy farmers can expand existing facilities and build new ones,so farmers are more less responsive to a higher price.
• B)Dairy farmers can expand existing facilities and build new ones,so farmers are more responsive to a higher price.
• C)Dairy farmers can squeeze just a little more output from their existing production facilities.
• D)none of the above

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Definitions:

Expectations

beliefs about the future, especially about how someone or something is going to behave or perform.

Stereotyping

The act of assigning a set of characteristics to a group of people based on oversimplifications or assumptions, often leading to misrepresentation.

Organizational Settings

refers to the work environment and conditions under which a company or institution operates, including its culture, structure, and processes.

Fundamental Attribution Error

A cognitive bias in which people tend to overemphasize personal characteristics and ignore situational factors when explaining others' behavior.