The long-run market supply curve in a competitive market will

Question

BlackTom AI · Accepted Answer

The prompt asks about the long-run market supply curve in a competitive market and provides an answer labeled as option b: 'typically be more elastic than the short-run supply curve.'

Since the full list of answer options is not provided, I will focus on analyzing the given statement and the general concept, and note the limitation about missing alternatives.

First, consider how supply responds to price changes in the short run versus the long run. In the short run, some inputs (like capital) are fixed, so producers cannot adjust all their production factors quickly. This tends to make the short-run supply relatively inelastic: quantity supplied changes, but not by a large proportion for a given price change.

In the long run, all inputs are adjustable. Firms can build or decommission capital, enter or exit the industry, and adjust production processes. This greater flexibility means quantity supplied can respond more fully to price changes, making the long-run supply curve more elastic than the short-run supply curve.

Therefore, the statement that the long-run market supply curve is typically more elastic than the short-run supply curve is consistent with standard economic theory. It reflects the idea that time allows for more enter/exit and input adjustments, amplifying responsiveness to price.

Potential misconceptions to watch for:
- If someone argues long-run supply is perfectly elastic, that would be incorrect in most real-world markets; there are costs and constraints even in the long run that prevent infinite responsiveness.
- If someone claims long-run supply is less elastic than short-run, this contradicts the core reasoning about entry/exit and factor substitution opportunities becoming available over time.
- Some students confuse marginal costs with supply; elasticity refers to response to price changes, not the absolute level of costs.

In summary, given the standard theory, the long-run supply tends to be more elastic due to full adjustment capabilities, which supports the provided option phrasing that the long-run supply is typically more elastic than the short-run supply curve.

The long-run market supply curve in a competitive market will

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