The table below gives part of the supply schedule for personal computers in the United States. Price Quantity Supplied before tech change $1,100 12,000 $900 8,000 a) Calculate the price elasticity of supply when price rises from $900 to $1,100 using the arc elasticity formula (the midpoint method). b) Now suppose that technology changes such that at every price, 1000 more computers are supplied. Now, as prices rise from $900 to $1,100, is the elasticity of supply smaller than, larger than, or equal to the elasticity in part a)? Price Quantity Supplied after tech change $1,100 13,000 $900 9,000 c) Does the change in b) change the slope of the supply curve? Are slope and elasticity the same thing? Explain.
The table below gives part of the supply schedule for personal computers in the United States.
|
|
Quantity Supplied before tech change |
|
$1,100 |
12,000 |
|
$900 |
8,000 |
a) Calculate the price elasticity of supply when price rises from $900 to $1,100 using the arc elasticity formula (the midpoint method).
b) Now suppose that technology changes such that at every price, 1000 more computers are supplied. Now, as prices rise from $900 to $1,100, is the elasticity of supply smaller than, larger than, or equal to the elasticity in part a)?
|
Price |
Quantity Supplied after tech change |
|
$1,100 |
13,000 |
|
$900 |
9,000 |
c) Does the change in b) change the slope of the supply curve? Are slope and elasticity the same thing? Explain.
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