Assume that the price of smartphones increased from $420 to $444 per unit. The manufacturer decides to supply 15,000 units instead of 12,000. Calculate the price elasticity of supply. Is supply elastic or inelastic? Describe at least one factor that determines the price elasticity of supply (note, this is different than PE of Demand).

answer

watching

views

For unlimited access to Homework Help, a Homework+ subscription is required.

You have 0 free answers left.
Get unlimited access to 3.8 million step-by-step answers.

Get unlimited access

Already have an account? Log in

Anne Gillian DueroLv10

28 Sep 2019

Unlock all answers

Get 1 free homework help answer.

Already have an account? Log in

Related questions

Step 1
Analyze gasoline price hike statistics in the following scenario.
In June 2008, the U.S. retail gas price jumped from $3 to $4 a gallon.

This is a 33% increase in price from January 2008.

During that time, the total quantity of gasoline purchased fell by 3%.

Supplies of gasoline produced also decreased from 1 million barrels to 800,000 barrels.

No viable substitute has been created to replace gasoline.

Step 2
Calculate the price elasticity of gasoline.
In a one- to two-page (250-500-word) paper, address the following. Be sure to show all work.

Calculate the price elasticity of demand for gasoline.

Calculate the elasticity of supply using the information provided.

Calculate the changes in consumer and producer surplus.

Because there is no viable substitute for gasoline at this time, what can you say about the cross-elasticity and income elasticity of supply and demand for gasoline?

Is the demand for gasoline elastic, inelastic, perfectly elastic or inelastic, or unit elastic?

Comparative Advantage
Suppose Steve can specialize and produce either 1600 rugs and 0 paintings, or 0 rugs and 800 paintings; and Cindy can produce 250 rugs and 0 paintings, or 0 rugs and 1000 paintings, and assuming constant opportunity costs:

State which person has a comparative advantage in rugs. Explain why.

Using your answer in part a, if the terms of trade are 3 rugs = 2 paintings, and Steve

initially produces 900 rugs and 350 paintings, and Cindy initially produces 175 rugs and 300 paintings, what are the gains from specialization and trade to each person if Steve trades 600 units of the good he has a comparative advantage in?

Supply and Demand

Given QD = 800 â 2P and QS = 2P + 100, what is the market equilibrium price (P*) and

quantity (Q*)?

Suppose a change occurs in the market such that QDâ = 660 â 2P and QSâ= 2P + 100.

Calculate the new market equilibrium price (P**) and quantity (Q**).

Elasticity

From your answers in the supply and demand question above, use the mid-point

formula to calculate the price elasticity of supply (to two decimal places).

Using your answer in part a, is the price elasticity of supply elastic, inelastic or unit

elastic?

State how you were able to determine if the price elasticity of supply is elastic, inelastic

or unit elastic.