What are the main influences on the elasticity of supply that make the supply of some goods elastic and the supply of other goods inelastic?
What will be an ideal response?
The main influences on the elasticity of supply are:
• Resource substitution possibilities: the greater the suppliers' ability to substitute resources, the greater will be their ability to react to price changes and the greater the elasticity of supply.
• Time frame for the supply decision: the greater the amount of time available after the price change, the greater is the suppliers' ability to adjust quantity supplied, and the greater the elasticity of supply.
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