Final answer:
The statement is true; the degree of price elasticity of supply is influenced by the ability of producers to quickly adjust and move resources to different uses. This response to price changes reflects the concept of elasticity, where elastic supply means high responsiveness, and inelastic supply means low responsiveness to price changes.
Step-by-step explanation:
The statement that the degree of price elasticity of supply depends on how easily and quickly producers can shift resources between alternative uses is true. The concept of elasticity measures how a percentage change in one variable, such as price, can cause a percentage change in another variable, such as quantity supplied.
When the elasticity of supply is high (>1), producers can quickly adjust their production in response to price changes, indicating a high degree of responsiveness or elastic supply. Conversely, when elasticity is low (<1), it shows a lower responsiveness, known as inelastic supply. The ease in shifting resources impacts this responsiveness, as it determines how quickly suppliers can react to market changes.
Factors such as cost of production, availability of substitutes, and the time period considered (immediate, short-term, or long-term) influence the elasticity of supply. For instance, industries with high fixed costs or limited raw materials may have more inelastic supply compared to those with more flexibility in their production processes.
Unitary elasticity indicates a proportional response to price changes, where a percentage increase in price leads to an equivalent percentage change in quantity supplied. The study of elasticity goes beyond just the price sensitivity of supply and demand; it can also be applied to other factors affecting quantities supplied and demanded such as income levels and consumer preferences.