Homework SourseThe price elasticity of supply for basmati rice an aromatic
The price elasticity of supply for basmati rice (an aromatic strain of rice) is likely to be which of the following?
| High in both the long run and the short run, because the inputs required to produce basmati rice can easily be duplicated. | |
| Low in both the long and short runs, because rice farming requires only unskilled labor. | |
| High, because consumers have a lot of other kinds of rice and other staple foods to choose from. | |
| Higher in the long run than the short run, because farmers cannot easily change their decisions about how much basmati rice to plant once the current crop has been planted. |
Solution
In the short run, farmers cannot change their decision about planting a crop. But in the long run, decisions can easily be changed. This is because once a crop is planted, nothing can be done in the short run.
Short run is the time period in which not much can be changed. So elasticity is low in the short run.
But long run is the time period sufficient enough for decisions to be altered. So elasticity is higher in the long run.
Answer - Higher in the long run than the short run, because farmers cannot easily change their decisions about how much basmati rice to plant once the current crop has been planted.
