2. Prices also influence the production of energy. The gestation period of production for energy resources is

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2. Prices also influence the production of energy. The gestation period of production for energy resources is often three to five years. Therefore, in the short run, the supply of most energy resources is highly inelastic. However, in the long nm, higher prices (and profits) attract additional exploration and capital investment. Thus, in the long run, the supply of energy resources is considernbly more elastic than it is during the short run.

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