Chapter 5: Q.4 (page 129)
Why is the supply curve with constant unitary elasticity a straight line?
Because the curve is inclined upwards, and both price and quantity are rising in lockstep
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From the data in Table 5.6 about the supply of alarm clocks, calculate the price elasticity of supply from point J to point K, point L to point M, and point N to point P. Classify the elasticity at each point as elastic, inelastic, or unit elastic.
In a market where the supply curve is perfectly inelastic, how does an excise tax affect the price paid by consumers and the quantity bought and sold?
Describe the general appearance of a demand or a supply curve with zero elasticity.
Would you expect supply to play a more significant role in determining the price of a basic necessity like food or a luxury like perfume? Explain. Hint: Think about how the price elasticity of demand will differ between necessities and luxuries.
If demand is elastic, will shifts in supply have a larger effect on equilibrium quantity or on price?
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