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CSEET · Economic and Business Environment · Basics of Demand and Supply and Forms of Market Competition

Which of the following statements about the elasticity of supply of agricultural goods in the short run is most appropriate?

Short-run supply of agricultural goods is generally inelastic. Output depends on crop cycles and weather, so once sowing is done farmers cannot quickly raise quantity when prices rise, unlike manufacturers who can adjust production faster.

  1. ASupply is generally inelastic because output cannot be quickly adjusted after sowingCorrect
  2. BSupply is perfectly elastic because farmers can harvest anytime
  3. CSupply is always unitary elastic
  4. DSupply is more elastic than that of manufactured goods

Explanation

Agricultural output depends on crop cycles and weather, so after planting the quantity cannot be changed quickly in response to price. Hence short-run supply is relatively inelastic. Manufactured goods can usually be expanded faster, so they are more elastic.

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