Question

The easier it is for producers to shift production toward a product whose price has​ risen, the more ____________ the supply for that product

A. Elasticity
B. Flexibility
C. Rigidity
D. Volatility

Answer 1

The answer is option A: Elasticity. When the price of a product rises, producers can shift production more easily if the supply of the product is elastic.

Step-by-step explanation:

The answer to the question is option A: Elasticity.

When the price of a product rises, producers have the ability to shift their production towards that product more easily if the supply of the product is elastic. Elasticity refers to the responsiveness of quantity supplied to changes in price. In this case, a more elastic supply means that producers can increase their production in response to the price increase, making it easier for them to meet the higher demand.

For example, let's say the price of corn increases due to a higher demand for ethanol. If the supply of corn is elastic, farmers can easily allocate more land and resources towards growing corn, resulting in an increased supply of corn in the market.