Is supply more elastic or less elastic as more time passes after a price change? Explain your answer
What will be an ideal response?
Supply becomes elastic as more time passes after a price change. Consider the case of an increase in price. As more time passes, producers have time to gather more resources, such as building additional factories, and to implement new production techniques. Hence as time passes, the quantity supplied increases.
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Which of the following is TRUE about a perfect price discriminating monopolist?
A) Price is greater than marginal revenue. B) Price always exceeds marginal cost. C) The firm makes zero economic profit. D) The firm produces the efficient level of output.
Under the Fed's current interest-rate-targeting approach to monetary policy, if the demand for federal funds by depository institutions increases today, then, other things being equal
A) the market federal funds rate decreases, and the Fed's Trading Desk responds by selling bonds. B) the market federal funds rate increases, and the Fed's Trading Desk responds by buying bonds. C) the market federal funds rate decreases, and the Fed's Trading Desk responds by buying bonds. D) the market federal funds rate increases, and the Fed's Trading Desk responds by selling bonds.
Which statement is false?
A. Before the Civil War about three quarters of the farms of over 500 acres were located in the South. B. The great abundance of land was the most influential factor in the United States' economic development during the 19th century. C. Although the percentage of Americans living on farms has declined substantially over the last 70 years, the actual number of people living on farms has remained constant. D. None of the statements are false.
How does an open-market purchase by the Fed affect the level of bank reserves and the interest rate? Illustrate the interest rate effect by drawing the appropriate graph.
What will be an ideal response?