What is the difference between short-run price elasticity of supply and long-run price elasticity of supply in relation to the time period of employment?

What is the difference between short-run price elasticity of supply and long-run price elasticity of supply in relation to the time period of employment?

The difference between short-run price elasticity of supply and long-run price elasticity of supply lies in the time period of employment.

Short-run price elasticity of supply refers to the responsiveness of the quantity supplied to a change in price in the short run, where the time period of employment is fixed and cannot be adjusted. In the short run, producers may have limited ability to increase or decrease their production levels due to factors such as fixed inputs, production capacity constraints, or contractual obligations. Therefore, the short-run price elasticity of supply tends to be relatively inelastic, meaning that the quantity supplied does not change significantly in response to price changes.

On the other hand, long-run price elasticity of supply refers to the responsiveness of the quantity supplied to a change in price in the long run, where all factors of production can be adjusted. In the long run, producers have the flexibility to adjust their production levels by changing inputs, expanding or contracting production facilities, or entering or exiting the market. As a result, the long-run price elasticity of supply tends to be more elastic, meaning that the 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 of employment and the flexibility of producers to adjust their production levels.