Chapter 5: Q7. (page 115)
How is the price elasticity of supply calculated? Explain what it measures?
The price elasticity of supply is calculated by thepercentage change in quality supplied by the percentage change in price. It is measured byhow much quality is provided to change in price.
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The ability of firms to enter and exit a market over time means that, in the long run,
a. the demand curve is more elastic.
b. the demand curve is less elastic.
c. the supply curve is more elastic.
d. the supply curve is less elastic.
What would the gasoline price elasticity of supply mean to UPS or FedEx?
When someone’s kidneys fail, the person needs to have medical treatment with a dialysis machine (unless or until they receive a kidney transplant) or they will die. Sketch a supply and demand diagram, paying attention to the appropriate elasticities, to illustrate that the supply of such dialysis machines will primarily determine the price.
What is the formula for the cross-price elasticity of demand?
If supply is elastic, will shifts in demand have a larger effect on equilibrium quantity or on price?
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