Economics Elasticity Of Supply Questions
The difference between short-run price elasticity of supply and long-run price elasticity of supply lies in the time period considered.
Short-run price elasticity of supply measures the responsiveness of quantity supplied to a change in price in the short run, where the factors of production are fixed or cannot be easily adjusted. In the short run, firms may not be able to quickly increase or decrease their production levels due to constraints such as limited resources, capacity, or time. Therefore, the short-run price elasticity of supply tends to be relatively inelastic, meaning that quantity supplied does not change significantly in response to price changes.
On the other hand, long-run price elasticity of supply measures the responsiveness of quantity supplied to a change in price in the long run, where all factors of production can be adjusted. In the long run, firms have the flexibility to adjust their production levels by changing inputs, expanding or contracting their operations, or entering or exiting the market. As a result, the long-run price elasticity of supply tends to be more elastic, meaning that quantity supplied can change significantly in response to price changes.
In summary, the key difference between short-run and long-run price elasticity of supply is the time period considered and the flexibility of firms to adjust their production levels.