Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
The time period allowed for production adjustments
B
The availability of substitutes in the market
C
The income level of consumers purchasing the product
D
The overall demand for goods in the economy
Understanding the Answer
Let's break down why this is correct
Answer
When the price of a product goes up significantly, the supply of that product may change in response. The key factor that determines how much the supply will respond is called price elasticity of supply. This means that if producers can easily increase their production when prices rise, the supply is considered elastic. For example, if a farmer can quickly grow more apples in response to higher prices, the supply of apples is elastic. However, if it takes a long time to grow more apples, the supply is less responsive, or inelastic, to the price change.
Detailed Explanation
The time allowed for production changes is key. Other options are incorrect because Some might think substitutes matter more; It's easy to confuse consumer income with supply.
Key Concepts
Determinants of price elasticity of supply
Price changes and supply response.
Topic
Price Elasticity of Supply
Difficulty
medium level question
Cognitive Level
understand
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