Microeconomics:
4th Edition
ISBN: 9781464143878
Author: Paul Krugman
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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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