Price Elasticity of Supply and Product Characteristics

Steps:

• Define price elasticity of supply (PES) as the responsiveness of quantity supplied to a price change; high PES means supply adjusts easily.
• Identify key factors for high PES: ability to store output without spoilage, spare production capacity, and time for adjustment.
• Link non-perishability to high PES, as storable goods allow delayed supply responses to price rises.
• Rule out demand-side concepts (inferior/luxury goods) and unrelated costs (opportunity cost) that don't affect supply elasticity.

Why B is correct:

• Non-perishable goods can be stored indefinitely, enabling producers to increase supply quickly when prices rise, per the PES formula (%ΔQS / %ΔP > 1 for elasticity).

Why the others are wrong:

• A: High opportunity cost affects production choices but not the responsiveness of supply to price changes.
• C: Inferior goods relate to income elasticity of demand, not supply elasticity.
• D: Luxury goods involve high income elasticity of demand, irrelevant to supply responsiveness.

Final answer: B