« previous next »

Author Question: Calculate the price elasticity of supply for the following goods. Also comment on the elasticity in ... (Read 99 times)

luvbio

  • Hero Member
  • *****
  • Posts: 623
on: Jun 29, 2018
Calculate the price elasticity of supply for the following goods. Also comment on the elasticity in each case.
 
  a) When the price of a good is 100, 200 units are supplied. But when the price increases to 300, 220 units are supplied.
  b) When the price of a good is 50, 50 units are supplied. But when the price decreases to 30, 10 units are supplied.

Question 2

When a commercial bank lends 1000 to a customer, and the loan proceeds are spent by the customer, the legal reserves of the banking system
 
  A) decline by 1000.
  B) do not change unless the loan proceeds are withdrawn in currency.
  C) rise by 1000.
  D) rise by more than 1000 because spending increases nominal GDP.


recede

  • Sr. Member
  • ****
  • Posts: 315
Reply #1 on: Jun 29, 2018
Answer to Question 1

a) Percentage change in price = 200
Percentage change in quantity supplied = 10
Price elasticity of supply = 10/200 = 0.05
The good has a relatively inelastic supply.
b) Percentage change in price = -40
Percentage change in quantity supplied = -80
Price elasticity of supply = -80/-40 = 2
The good has a relatively elastic supply.

Answer to Question 2

B


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

Methicillin-resistant Staphylococcus aureus or MRSA was discovered in 1961 in the United Kingdom. It if often referred to as a superbug. MRSA infections cause more deaths in the United States every year than AIDS.

Methicilli ...
Did you know?

More than nineteen million Americans carry the factor V gene that causes blood clots, pulmonary embolism, and heart disease.

Did you know?

Tobacco depletes the body of vitamins A, C, and E, which can result in any of the following: dry hair, dry skin, dry eyes, poor growth, night blindness, abscesses, insomnia, fatigue, reproductive system problems, sinusitis, pneumonia, frequent respiratory problems, skin disorders, weight loss, rickets, osteomalacia, nervousness, muscle spasms, leg cramps, extremity numbness, bone malformations, decayed teeth, difficulty in walking, irritability, restlessness, profuse sweating, increased uric acid (gout), joint damage, damaged red blood cells, destruction of nerves, infertility, miscarriage, and many types of cancer.

Did you know?

According to the National Institute of Environmental Health Sciences, lung disease is the third leading killer in the United States, responsible for one in seven deaths. It is the leading cause of death among infants under the age of one year.

Did you know?

Drug-induced pharmacodynamic effects manifested in older adults include drug-induced renal toxicity, which can be a major factor when these adults are experiencing other kidney problems.

Defibrillator. Defibrillators are devices that supply a voltage charge to the heart in the hope of r Defibrillator. Defibrillators are devices that supply a voltage charge to the heart in the hope of r
How to calculate annuity when compounded semi-annually (Part 1) How to calculate annuity when compounded semi-annually (Part 1)
Who Oversees the Food Supply? Who Oversees the Food Supply?
The net price of an article is $79.84. What is the list price if a discount of 23% was allowed? The net price of an article is $79.84. What is the list price if a discount of 23% was allowed?
Draw an Edgeworth box for two consumers over two goods Draw an Edgeworth box for two consumers over two goods
Video: Humerus Adduction Animation

For a complete list of videos, visit our video library