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Chapter 18: Problem 3

Over time the supply of a particular good or service tends to (I.05) a) become more elastic b) become less clastic c) stay about the same

Short Answer

Expert verified
a) become more elastic

Step by step solution

01

Understand the concept of elasticity

Elasticity measures the percentage change in the quantity supplied (or demanded) in response to a percentage change in price. A more elastic supply means that the quantity supplied is more responsive to price changes, while a less elastic supply means that the quantity supplied is less responsive to price changes.
02

Analyze factors influencing supply elasticity over time

One factor to consider is the availability of resources and technology. As time passes, resources and technology may become more efficient, making it easier for producers to adjust their production levels in response to price changes. This would make the supply of a good more elastic over time. Other factors such as government regulations or market competition may also influence the elasticity of supply.
03

Choose the correct answer

Based on our analysis of the factors influencing supply elasticity over time, we can conclude that the supply of a particular good or service tends to become more elastic over time. This is because improvements in resources, technology, and market conditions make it easier for producers to respond to price changes. Therefore, the correct answer is: a) become more elastic

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Most popular questions from this chapter

When demand is perfectly elastic, a tax increase is bornc (L.O7) a) only by the buyer c) mostly by the buyer b) only by the seller d) mostly by the seller

When demand is relatively inelastic and supply is relatively elastic, the burden of a tax will be borne ( \(\mathrm{OO})\) a) mainly by sellers b) mainly by buyers c) equally between sellers and buyers d) it is impossible to determine the relative burdens of the tax

Statement L. A perfectly elastic demand curve has an elasticity of zero. Statement II. When demand is elastic and price is raised, total revenue will fall. (LOl) a) Statement I is truc, and statement II is false. b) Statcment II is true, and statement I is false. c) Both statements are true. d) Roth statements are false.

Demand is elastic if (LO1) a) percentage change in quantity is greater than percentage change in price b) percentage change in price is greater than percentage change in quantity c) percentage change in quantity demand is zero d) percentage change in price is zero e) percentage change in quantity is equal to percentage change in price

When the cross elasticity of demand for two services is negative, then these services are (LO4) a) complements b) substitutes c) both complements and substitutes d) neither complements nor substitutes
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