Final answer:
The easier it is for producers to adjust production levels in response to price changes, the more elastic the supply for a product. Increases in profit and decreases in production costs tend to increase supply, shifting the supply curve to the right. Conversely, higher production costs decrease supply elasticity and shift the supply curve to the left.
Step-by-step explanation:
The easier it is for producers to shift production toward a product whose price has risen, the more elastic the supply for that product. When a firm's profits increase because of a price rise for its product, it becomes more motivated to produce output, thus increasing supply. This is because the more a firm produces, the more profit it is likely to earn. Lower costs of production also result in a firm supplying a larger quantity at any given price, which is represented graphically as a supply curve shifting to the right.
Conversely, if a firm faces higher costs of production, the potential profits decrease, which typically leads to a smaller quantity supplied at any given price. In this scenario, the supply curve would shift to the left, indicating less elasticity. Therefore, supply elasticity is dependent on how easily and quickly producers can adjust their production levels in response to price changes.