Factors Reducing Supply Elasticity

Steps:

• Define PES as the responsiveness of quantity supplied to price changes; lower PES means less responsive supply.
• Identify key determinants: production time, input flexibility, and storability affect how quickly supply adjusts.
• Evaluate options: shorter production ramps up supply faster (higher PES); longer delays it (lower PES).
• Select option increasing production barriers to reduce elasticity.

Why D is correct:

• Longer production time limits quick output increases when prices rise, reducing PES per the time horizon in supply elasticity theory.

Why the others are wrong:

• A: Greater capital-labor substitution boosts production flexibility, increasing PES.
• B: Advertising primarily shifts demand, not affecting supply responsiveness.
• C: Longer storage allows stockpiling for future sales, increasing PES.

Final answer: D