Principles of Economics- Mankiw (5th) 102

Principles of Economics- Mankiw (5th) 102 - $4 Quantity...

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100 110 100 125 (a) Perfectly Inelastic Supply: Elasticity Equals 0 $5 4 Supply Quantity 100 0 (b) Inelastic Supply: Elasticity Is Less Than 1 $5 4 Quantity 0 (c) Unit Elastic Supply: Elasticity Equals 1 $5 4 Quantity 0 Price 1. An increase in price . . . 2. . . . leaves the quantity supplied unchanged. 2. . . . leads to a 22% increase in quantity supplied. 1. A 22% increase in price . . . Price Price 2. . . . leads to a 10% increase in quantity supplied. 1. A 22% increase in price . . . (d) Elastic Supply: Elasticity Is Greater Than 1 $5 4 Quantity 0 Price (e) Perfectly Elastic Supply: Elasticity Equals Infinity
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Unformatted text preview: $4 Quantity Price Supply 1. A 22% increase in price . . . 2. At exactly $4, producers will supply any quantity. 1. At any price above $4, quantity supplied is infinite. 2. . . . leads to a 67% increase in quantity supplied. 3. At a price below $4, quantity supplied is zero. Supply Supply 100 200 Supply Figure 5-6 T HE P RICE E LASTICITY OF S UPPLY . The price elasticity of supply determines whether the supply curve is steep or flat. Note that all percentage changes are calculated using the midpoint method....
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