Question

The suppliers of Automobile A are struggling to increase production in response to price increases at the same rate as the suppliers of Automobile B. What can be determined about the suppliers of Automobile B? (2 points)

They sell superior products.
They have a greater price elasticity of supply.
They are currently experiencing unit elasticity.
They have acquired a trade deal to boost production.
They have acquired an increase in technology or labor.

Answer 1

The suppliers of Automobile B are determined to have a greater price elasticity of supply, meaning they can more quickly and efficiently increase production in response to price increases.

Step-by-step explanation:

Considering that the suppliers of Automobile A are struggling to increase production in response to price increases at the same rate as the suppliers of Automobile B, it can be determined that the suppliers of Automobile B have a greater price elasticity of supply. This means that they are more responsive to changes in price in terms of the quantity they are able to supply to the market.

A greater price elasticity of supply may result from efficiencies in production, access to better technologies or resources, or a more flexible labor force. It is not necessarily indicative of a superior product, a gained trade deal solely, or unit elasticity, but rather a reflection of the suppliers' ability to adapt quickly to market conditions and increase production efficiently when the prices rise.