All Things Equal, the Price Elasticity of Supply

question 56

Multiple Choice

All things equal, the price elasticity of supply

• A) will be smaller in the short run than in the long run.
• B) will be smaller in the long run than in the short run.
• C) is the same for the short run and the long run.
• D) approaches zero in the long run.

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Definitions:

Fixed Maintenance Cost

The portion of total maintenance costs that does not fluctuate with changes in activity level or output.

Machine-Hours

The total hours that a machine is operated over a specific period of time, used in allocating manufacturing costs.

Relevant Range

The scope of operations in which the beliefs regarding constant and fluctuating cost patterns hold true.

Cost Formula

An equation used to predict the total costs associated with a certain level of activity or production volume.