Answered: Currently, at a price of $1 each, 100…

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter19: Elasticity

Section: Chapter Questions

Problem 3QP: Prove that price elasticity of demand is not the same as the slope of a demand curve.

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Question

Currently, at a price of $1 each, 100 popsicles are sold per day in the perpetually hot town of Rostin. Consider the elasticity of supply. In the short run, a price increase from $1 to $2 is unit-elastic (E_s = 1). In the long run, a price increase from $1 to $2 has an elasticity of supply of 1.50. (Hint: Apply the midpoints approach to the elasticity of supply.)

A. How many popsicles will be sold each day in the short run if the price rises to $2 each?

B. So how many popsicles will be sold per day in the long run if the price rises to $2 each?

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