Supply Elasticity Determines Quantity Response

Steps:

• Increased demand shifts the demand curve rightward, raising price.
• Higher price incentivizes more production along the supply curve.
• Quantity supplied rises more when supply is elastic (flatter curve).
• Elastic supply occurs with flexible resources and no constraints.

Why C is correct:

• With unemployed unskilled labor, firms can hire readily without wage hikes, allowing elastic supply per the law of supply (quantity responds strongly to price changes).

Why the others are wrong:

• A: Annual cycle and climate limit short-run output adjustments, making supply inelastic.
• B: Perishability and storage costs prevent stockpiling, constraining supply response.
• D: Full capacity in capital-intensive production blocks expansion, yielding inelastic supply.

Final answer: C