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. A. True B. False

True

Explanation:

Elasticity of supply measures the degree of responsiveness of quantity supplied to changes in price of the good.

Supply is less elastic if it is less responsive to changes in price.

When a firm reaches its maximum capacity, if price increases, the company would not be able to increase its quantity supplied in order to take advantage of the rise in price due to the fact that it has reached its near maximum capacity . If the firm wants to increase its production, it would have to invest in additional capital in order to increase production further. Thus, the firm would be less price elastic.

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