Microeconomics:
4th Edition
ISBN: 9781464143878
Author: Paul Krugman
Publisher: Worth Publishers
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Chapter 6, Problem 3P
To determine
- The
price elasticity of supply with mid-point method when price rises from $900 to $1100 and ascertain its nature.
- If for technological advancement the firms produce 1000 more computers at any given price, what will happen to the elasticity compared to part (a)?
- If in the long-run supply rises by 20% at any given price, what will be the impact of price rise on the elasticity of supply compared to part (a)?
Concept Introduction:
Price Elasticity of Supply:
The price elasticity of supply refers to the percentage change in the quantity supplied in response to the percentage change in price.
Elastic Supply:
If the elasticity of supply is greater than 1 then the supply is elastic.
Inelastic Supply:
If the elasticity of supply is less than 1 then the supply is inelastic.
Unit-Elastic:
If the elasticity of supply is equal to 1 then the supply is unit elastic.
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Exercise 5Consider the demand and supply functions for the notebooks market.QD=10,000−100pQS=900pa. Make a table with the corresponding supply and demand schedule.b. Draw the corresponding graph.c. Is it possible to find the price and quantity of equilibrium with the graph method? d. Find the price and quantity of equilibrium by solving the system of equations.
1. Consider the market supply curve which passes through the intercept and from which the marketequilibrium data is known, this is, the price and quantity of equilibrium PE=50 and QE=2000.a. Considering those two points, find the equation of the supply. b. Draw a graph for this equation.
2. Considering the previous supply line, determine if the following demand function corresponds to themarket demand equilibrium stated above. QD=.3000-2p.
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Price Elasticity of Supply; Author: Economics Online;https://www.youtube.com/watch?v=4bDIm3j-7is;License: Standard youtube license