The price of the coffe rose sharply last month, while the quantity sold remained the same. Each of the five people suggests an explanation- Tom: Demand increased, but supply was perfectly inelastic Dick: Demand increased, but it was perfectly inelastic Harry: Demand increased, but supply decreased at the same time Larry: Supply decreased, demand was unit elastic Mary: Supply increased, but demand was perfectly inelastic Who could possibly be right?

Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter5: Elastic And Its Application
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Problem 6PA: The price of coffee rose sharply last month, while the quantity sold remained the same. Five people...
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The price of the coffe rose sharply last month, while the quantity sold remained the same. Each of the five people suggests an explanation-

  • Tom: Demand increased, but supply was perfectly inelastic
  • Dick: Demand increased, but it was perfectly inelastic
  • Harry: Demand increased, but supply decreased at the same time
  • Larry: Supply decreased, demand was unit elastic
  • Mary: Supply increased, but demand was perfectly inelastic

Who could possibly be right?

 

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