Answered: qD = 100 – 0.5p, qS = 2p – 20 What is…

qD = 100 – 0.5p, qS = 2p – 20 What is the price elasticity of supply? Is the situation modeled here more likely to be reflecting a short- or long-run equilibrium? Why?

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter6: Elasticities

Section: Chapter Questions

Problem 19P

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Question

q^D= 100 – 0.5p, q^S = 2p – 20

What is the price elasticity of supply? Is the situation modeled here more likely to be reflecting a short- or long-run equilibrium? Why?

Expert Solution

Step 1

The price elasticity of supply measures the degree of responsiveness of supply to fluctuation in the price of the good. It is based on the law of supply that establishes the positive correlation between the quantity supplied and price of the good.

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