Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter5: Elasticity
Section: Chapter Questions
Problem 27CTQ: Can you think of an industry (or product) with near infinite elasticity of supply in the short term?...
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Question
![Price per pound
Price per pound
$9
8965
7
32
1
0
$9
8
7
6
5
4
3
2
-N
Panel (a)
An increase in demand
LO
Panel (c)
An increase in supply
S₁
5 10 15 20 25 30 35 40 45
Quantity (millions of pounds per month)
D₁
D₂
S₁
S₂
0 5 10 15 20 25 30 35 40 45
Quantity (millions of pounds per month)
Price per pound
Price per pound
$9
8
7
6
2
1
$9
8
7
65
Panel (b)
A decrease in demand
4
3
2
1
D₂
0 5 10 15 20 25 30 35 40 45
Quantity (millions of pounds per month)
D₁
Panel (d)
A decrease in supply
$₂
S₁
D₁
0 5 10 15 20 25 30 35 40 45
Quantity (millions of pounds per month)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6fab3e5b-e466-47a9-be3a-daa0be1d54d3%2F43e0e133-58b4-41ad-9740-e080f702a93a%2Fzttvosj_processed.png&w=3840&q=75)
Transcribed Image Text:Price per pound
Price per pound
$9
8965
7
32
1
0
$9
8
7
6
5
4
3
2
-N
Panel (a)
An increase in demand
LO
Panel (c)
An increase in supply
S₁
5 10 15 20 25 30 35 40 45
Quantity (millions of pounds per month)
D₁
D₂
S₁
S₂
0 5 10 15 20 25 30 35 40 45
Quantity (millions of pounds per month)
Price per pound
Price per pound
$9
8
7
6
2
1
$9
8
7
65
Panel (b)
A decrease in demand
4
3
2
1
D₂
0 5 10 15 20 25 30 35 40 45
Quantity (millions of pounds per month)
D₁
Panel (d)
A decrease in supply
$₂
S₁
D₁
0 5 10 15 20 25 30 35 40 45
Quantity (millions of pounds per month)
![It is summer ... and ice cream time. Use the supply and demand curve sheets you were provided to
think about the short-run ice cream market. Ice cream is a normal good.
Consider Panel d. The shift seen is due to a per unit production tax in ice cream.
What is the lost consumer surplus due to the tax (in $millions)?
$10
$17.50
$20
$150
O $35
$25
$140
O $22.50
O $7.50](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6fab3e5b-e466-47a9-be3a-daa0be1d54d3%2F43e0e133-58b4-41ad-9740-e080f702a93a%2Fclbmy8j_processed.jpeg&w=3840&q=75)
Transcribed Image Text:It is summer ... and ice cream time. Use the supply and demand curve sheets you were provided to
think about the short-run ice cream market. Ice cream is a normal good.
Consider Panel d. The shift seen is due to a per unit production tax in ice cream.
What is the lost consumer surplus due to the tax (in $millions)?
$10
$17.50
$20
$150
O $35
$25
$140
O $22.50
O $7.50
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