Concept:Elastic supply means firms can easily change the amount they produce when price changes.
Explanation:When there is free entry and exit, firms can quickly leave the market when prices fall and return when prices rise.
This makes total industry output very responsive to price changes.
So the industry supply curve becomes more elastic.
If firms are operating at full capacity, they cannot increase output quickly, so supply is inelastic.
Operating below capacity also limits response unless new firms can enter, but the key condition for high elasticity is free entry and exit.
Therefore, an industry’s supply curve is most elastic under free entry and exit.
Answer:A. enjoying free entry and exit