Question

In: Economics

5). Calculate the numerical value of the price elasticity of supply I each of the following...

5). Calculate the numerical value of the price elasticity of supply I each of the following situation using midpoint method A rise in the price of wheat from $300 to $350 per metric tonne increases the amount supplied by wheat farmers from 8 million to 9 million tonnes. The amount of farmed salmon sold drops from 2 million to 1 million kilograms when the price of salmon falls from $8 to $ 7.50. When the price of oranges rises from 2 million to 3 million per kilogram, the annual amount supplied rises from 2 million to 4 million kilograms.

Solutions

Expert Solution


Question 5

(a)

A rise in the price of wheat from $300 to $350 metric tonne increase the amount supplied by wheat farmers from 8 million to 9 million tonnes.

So,

P1 = $300

Q1 = 8 million

P2 = $350

Q2 = 9 million

Calculate the price elasticity of supply (using mid-point method) -

Thus,

The price elasticity of supply is 0.76

(b)

A fall in the price of salmon from $8 per kg to $7.50 per kg decreases the amount supplied by salmon farmers from 2 million to 1 million kilograms.

So,

P1 = $8

Q1 = 2 million

P2 = $7.50

Q2 = 1 million

Calculate the price elasticity of supply (using mid-point method) -

Thus,

The price elasticity of supply is 10.33

(c)

A rise in the price of oranges from $2 to $3 per kilogram increase the amount supplied by orange farmers from 2 million to 4 million kilograms.

So,

P1 = $2

Q1 = 2 million

P2 = $3

Q2 = 4 million

Calculate the price elasticity of supply (using mid-point method) -

Thus,

The price elasticity of supply is 1.67


Related Solutions

4). Calculate the numerical value of income elasticity in each of the following situations using the...
4). Calculate the numerical value of income elasticity in each of the following situations using the midpoint approach, and identify if the product is normal or inferior product. Purchases of automobiles rise from 2 million to 3 million when the average consumer income per year increases from $50,000 to $70,000. A fall in average consumer incomes per month from $3,000 to $2,800 leads to a drop in visits to massage therapists from 120,00 to 100,000 5). Calculate the numerical value...
3). Calculate the numerical value of cross elasticity in each of the following situations using the...
3). Calculate the numerical value of cross elasticity in each of the following situations using the mid- point method. In each case identify whether the two products are substitutes or complementary products. The price Julia pays each month for access to internet decreases from $80 to $40, causing the quantity demanded of e-magazines she reads on her computer to rise from 3 to 5. The quantity demanded of do-it – yourself hair- cutting sets increase from 5,000 to 10,000 when...
Calculate the price elasticity of supply for each of the following combinations of price and quantity...
Calculate the price elasticity of supply for each of the following combinations of price and quantity supplied, using the midpoint formula (arc elasticity). In each case, determine whether supply is elastic, inelastic, perfectly elastic, perfectly inelastic, or unit elastic. c. Price falls from $2.25 to $1.75; quantity supplied remains at 600 units. d. Price increases from $1.75 to $2.25; quantity supplied increases from 466.67 units to 600 units.
Revenue is maximized at what specific numerical value of the (own-)price elasticity of demand
Revenue is maximized at what specific numerical value of the (own-)price elasticity of demand
Solve for price elasticity of demand (Ed) and price elasticity of supply (Es) between each pair...
Solve for price elasticity of demand (Ed) and price elasticity of supply (Es) between each pair of prices ($8 and $7, and $7 and $6) and determine the total revenue that could be earned at each price. Show your work! Supply and Demand Es Quantity Supplied Product Price Quantity Demanded Total Revenue Ed 17,000 $8 7,000 13,000 $7 22,000 11,000 $6 25,000
In each of the following cases, do you think the price elasticity of supply is (1)...
In each of the following cases, do you think the price elasticity of supply is (1) perfectly elastic; (2) perfectly inelastic; (3) elastic, but not perfectly elastic; or (4) inelastic, but not perfectly inelastic? a. An increase in demand this summer for luxury cruise leads to a huge jump in the sales price of a cabin on the Queen of Oak Bay b. The price of a kilowatt of electricity is the same during periods of high electricity demand as...
B. In each of the following cases, do you think the price elasticity of supply is...
B. In each of the following cases, do you think the price elasticity of supply is (i) perfectly elastic; (ii) perfectly inelastic; (iii) elastic, but not perfectly elastic; (iv) inelastic, but not perfectly inelastic? Explain your answer. An increase in demand this summer for domestic travel leads to a huge jump in the price of motel rooms. The price of a kilowatt of electricity is the same during periods of high electricity demand as during periods of low electricity demand....
Advise what the Price Elasticity of Supply is. The price elasticity of supply is either zero...
Advise what the Price Elasticity of Supply is. The price elasticity of supply is either zero or a positive number. TRUE or FALSE? Please Explain. A zero price elasticity of supply means that the quantity supplied will not vary as the price varies. TRUE or FALSE? Please Explain. A positive price elasticity of supply means that as the price of an item rises, the quantity supplied rises. TRUE or FALSE? Please Explain.
Define price elasticity of supply. Discuss any four determinants of price elasticity of supply.
Define price elasticity of supply. Discuss any four determinants of price elasticity of supply.
What is elasticity? What is price elasticity of demand? What is price elasticity of supply?
What is elasticity? What is price elasticity of demand? What is price elasticity of supply?
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT