Question

In: Economics

Determine whether the following scenarios indicate that the supply of the product is relatively elastic or...

Determine whether the following scenarios indicate that the supply of the product is relatively elastic or relatively inelastic.

  • oil producers are currently producing 30% below capacity
  • a store that sells a good that cannot be stored easily
  • a donut shop runs out of jelly-filled donuts this morning
  • food trucks that can quickly relocate
  • a golf course that has a limited amount of land to add new holes

Elastic Inelastic

Solutions

Expert Solution

Ans- A price elasticity supply greater than 1 means supply is relatively elastic, where the quantity supplied changes by a larger percentage than the price change. This is called relatively elastic supply.

Above mentioned examples of relatively elastic supply are:-

1) A donut shop runs out of jelly-filled donuts this morning- This is because the resources to make donuts are readily available and the total cost would be minimal to ramp production up or down.

2) food trucks that can quickly relocate- This is because there are numerous factors that directly impact the elasticity of supply for a good including stock, time period, availability of substitutes, and spare capacity. Here trucks can relocate goods quickly so it will be relatively elastic supply.

Relatively inelastic supply occurs when sellers are able to produce goods only by switching resources among a small number of imperfect substitutes-in-production.That means the percentage change in quantity supplied changes by a lower percentage than the percentage of price change. Inelastic goods include nuclear power, which has a long lead time given the construction, technical know-how, and long ramp-up process for plants.

The above mentioned examples of relativity inelastic supply are:-

1)oil producers are currently producing 30% below capacity-Inelastic even when the price rises, supply cannot be increased more. This is the reason why this example is relatively Inelastic.

2)a store that sells a good that cannot be stored easily- This cannot be stored easily by the store that's why it is relatively Inelastic.

3)a golf course that has a limited amount of land to add new holes

Rahul Sunny answered 2 years ago
Next > < Previous

Related Solutions

Gross Domestic Product Assignment : For each of the following scenarios determine whether or not it...
Gross Domestic Product Assignment : For each of the following scenarios determine whether or not it should be included in the U.S. GDP calculation. How much would each situation increase GDP by (you should be able to give me an exact number)? If a transaction does not count towards GDP give me an explanation on the definition requirement it does not satisfy and why. Unless otherwise stated, assume that all transactions are completed domestically, within a one year time period....
• Is the demand curve for your product relatively elastic, inelastic, or unitary elastic? Demonstrate for...
• Is the demand curve for your product relatively elastic, inelastic, or unitary elastic? Demonstrate for your company's product, by how much the quantity demanded will change if you pass on a 10% increase in cost. In other words, show your calculation of the percentage change in the quantity demanded given a 10% change in your price. You must provide calculations showing the percentage change in quantity demanded. • Given your company's and the price elasticity of demand and the...
For this assignment, in each of the following five scenarios, indicate whether you consider the following...
For this assignment, in each of the following five scenarios, indicate whether you consider the following individual's behavior to be normal or abnormal. After deciding if the individual's behavior is normal or abnormal, defend your response by referencing the "4 D's" 1) A person drinks approximately three beers and three shots of liquor per day and sometimes has trouble remembering daily events in his life. 2) You see your neighbor trim his hedges with a pair of scissors and scrub...
For each of the following scenarios indicate whether they are an example of Newton's First Law...
For each of the following scenarios indicate whether they are an example of Newton's First Law or Netwon's Second Law and justify your choice. 1. A car travels down a staright highway at a constant velocity. 2. A bus driver suddenly hits the brakes. Passengers who were standing continue to move to the front of the bus and fall over each other. 3. A driver increases speed to pass another on the highway. 4. A comet moving through space suddenly...
In each of the following scenarios, indicate whether the unemployment rate will increase or decrease. a....
In each of the following scenarios, indicate whether the unemployment rate will increase or decrease. a. The government increases income tax rates   (Click to select)   increase   decrease   uncertain b. The government repeals a law that made it difficult to fire workers   (Click to select)   increase   decrease   uncertain c. There is an increase in the percentage of workers who are unionized   (Click to select)   increase   decrease   uncertain d. The number of weeks workers are entitled to unemployment benefits falls   (Click to...
In each of the following scenarios, indicate whether the unemployment rate will increase or decrease. a....
In each of the following scenarios, indicate whether the unemployment rate will increase or decrease. a. The government increases income tax rates  (Click to select)  increase  decrease  uncertain b. The government repeals a law that made it difficult to fire workers  (Click to select)  increase  decrease  uncertain c. There is an increase in the percentage of workers who are unionized  (Click to select)  increase  decrease  uncertain d. The number of weeks workers are entitled to unemployment benefits falls  (Click to select)  decrease  increase  uncertain e. More firms begin to pay efficiency wages  (Click to select)  increase  decrease  uncertain f. The...
If the demand for a product is inelastic but the supply is elastic, the ________ will...
If the demand for a product is inelastic but the supply is elastic, the ________ will bear the tax incidence. A) government B) producer C) consumer
Macroeconomics Econ 231 Gross Domestic Product assignment ____________________________For each of the following scenarios determine whether or...
Macroeconomics Econ 231 Gross Domestic Product assignment ____________________________For each of the following scenarios determine whether or not it should be included in the U.S. GDP calculation. How much would each situation increase GDP by (you should be able to give me an exact number)? If a transaction does not count towards GDP give me an explanation on the definition requirement it does not satisfy and why. Unless otherwise stated, assume that all transactions are completed domestically, within a one year...
1. For each of the following scenarios, determine if there is an increase/decrease in supply or...
1. For each of the following scenarios, determine if there is an increase/decrease in supply or quantity supply for the goods in Italics. Draw a supply and demand curve to examine the changes in equilibrium, if any. a.) Growers of tomatoes experience an unusually good growing season b.) The price of movie tickets, a substitute for Netflix movie rentals, goes up c.) The cost of producing tires increases d.) Kendrick Lamar, who is crazy about air travel, gets fired from...
For each of the following brief scenarios, indicate whether the HIGHEST ranking supervisor (in the scenario)...
For each of the following brief scenarios, indicate whether the HIGHEST ranking supervisor (in the scenario) acted in an appropriate manner and give reasons as to why or why not. 1. The purchasing manager for a firm had been bragging in the factory break room about the great deal that he got for the firm on some paper for the printing department of the organization. In the meantime, the manager of the printing department was discovering that the quality of...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT