Question

True or False: For high levels of quantity supplied where firms have reached near maximum capacity, supply becomes less elastic because firms may need to invest in additional capital in order to increase production further. True

Answer 1

True

Step-by-step explanation:

Elasticity: It is referred to the responsiveness of supply or demand with the increase or decrease of price.

• In the case: As the supply has already reached it's capacity, and new investment would be required to further increase the production, hence supply becomes less elastic. Because it now would require more material to affect the quantity consumed.