The Long-Run Price Elasticity of Supply Is Greater Than the Short-Run

question 162

Multiple Choice

The long-run price elasticity of supply is greater than the short-run elasticity because

• A) firms have more time to secure additional or different factors of production.
• B) consumers react slowly to price increases.
• C) firms react more slowly in the long run.
• D) consumers react quickly to price decreases.
• E) firms have fewer choices in the long run.

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Definitions:

Public Saving

The portion of a government's budget surplus, which is the difference between tax revenues and government spending.

Private Saving

Private saving is the portion of households' and businesses' income that is not spent on consumption or taxes, typically saved for future investment or consumption.

Closed Economy

An economy that does not interact with other economies in the world

Government Deficit

Occurs when a government spends more money than it receives in revenue over a specific period, leading to borrowing or currency issuance.