Question

A market supply curve is more elastic in the long run than in the short run because


producers’ marginal costs are increasing


a

the quantity demanded increases at a steady rate


b

there are no fixed inputs in the long run


c

of constant returns to scale in production


d

of diseconomies of scale in production

Answer 1

c

In the long run firms can vary all inputs (and new firms can enter or exit), so supply is much more responsive to price changes. In the short run some inputs are fixed, limiting how much quantity can adjust.