What does elasticity of supply refer to?

Elasticity of supply refers to the responsiveness of the quantity supplied of a good to a change in its price. When supply is considered elastic, it means that a small change in price can lead to a significant change in the quantity supplied. This concept is crucial for understanding how producers react to market conditions.

When prices increase, suppliers may be incentivized to produce more of a good because they can receive a higher price for it, leading to a substantial increase in quantity supplied. Conversely, if prices decrease, suppliers may reduce production significantly because they cannot cover their costs at the lower price. This responsiveness is what characterizes elastic supply, making it a fundamental aspect of economics.

The other options do not accurately convey the concept of elasticity. The first option discusses an inability to change supply, which suggests inelasticity. The third option implies that supply remains constant regardless of demand, which does not relate to the elasticity concept. The fourth option suggests stability of supply despite price changes, which aligns more with inelastic supply rather than elastic supply. Thus, the correct choice highlights the significant change in supply due to a price change.