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Chapter 19: Q.22 (page 435)

Take a look at Figure 19-5. Following a price increase, is the quantity supplied more responsive to the price increase immediately, after an initial passage of time, and then after even more time has passed? Why is this so?

Short Answer

Expert verified

Time turns into a significant element in deciding the elasticity of supply. So the stockpile turns out to be more versatile with the progression of time.

Step by step solution

01

Given Information

Value elasticity of demand estimates how much the demand for the item changes with one unit change in the cost of the product.

02

Explanation

The stockpile for the item turns out to be more responsive with the progression of time. Makers carve out an opportunity to acclimate to changes in cost. They can't promptly change their stock example right away. They get some margin to change. So at first, the inventory is inelastic and afterwards continuously it becomes inelastic with the progression of time.

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Most popular questions from this chapter

The diagram below depicts the demand curve for "miniburgers" in a nationwide fast-food market. Use the information in this diagram to answer the questions that follow.

Quantity (mini burgers per day)

a. What is the price elasticity of demand along with the range of the demand curve between a price of \(0.20per miniburger and a price of role="math" localid="1651796932841" \)0.40per miniburger? Is demand elastic or inelastic over this range?

b. What is the price elasticity of demand along with the range of the demand curve between a price of \(0.80 per miniburger and a price of \)1.20 per miniburger? Is demand elastic or inelastic over this range?

c. What is the price elasticity of demand along with the range of the demand curve between a price of \(1.60 per miniburger and a price of \)1.80 per m ? Is demand elastic or inelastic over this range?

Suppose that over a range of prices, the price elasticity of demand varies from 15.0 to 2.5. Over another range of prices, the price elasticity of demand varies from 1.5 to 0.75. What can you say about total revenues and the total revenue curve over these two ranges of the demand curve as price falls?

How do you think that reducing experimental subjects" stress would have affected their price elasticity of demand for alcohol?

In the market for hand-made guitars, when the price of guitars is \(800, annual revenues are \)640,000. When the price falls to \(700, annual revenues decline to \)630,000. Over this range of guitar prices, is the demand for hand-made guitars elastic, unit-elastic, or inelastic?

Consider Figure 19-2. Work out the calculation for the price elasticity of demand between prices of \( 1 per reservation and \)2 per reservation to prove that the value is 0.158.
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