A Key Determinant of the Price Elasticity of Supply Is

question 26

Multiple Choice

A key determinant of the price elasticity of supply is the time period under consideration.Which of the following statements best explains this fact?

• A)Supply curves are steeper over long periods of time than over short periods of time.
• B)Buyers of goods tend to be more responsive to price changes over long periods of time than over short periods of time.
• C)The number of firms in a market tends to be more variable over long periods of time than over short periods of time.
• D)Firms prefer to change their prices in the short run rather than in the long run.

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Definitions:

Quantity Demanded

The entire quantity of a product or service that buyers are prepared and capable of buying at a certain price within a defined timeframe.

Interest Rates

The cost of borrowing money or the rate of return on investments, typically expressed as a percentage of the principal.

Loanable Funds

The money available for lending and borrowing in the financial markets.

Price Floor

A government or group-imposed price control or limit on how low a price can be charged for a product, aiming to protect producers.