For example suppose the price of lightbulbs increases

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: nominator. For example, suppose the price of lightbulbs increases by 10 percent, and the quantity supplied of lightbulbs increases by 20 percent. The numerator (20%) changes by more than the denominator (10%), so the supply of lightbulbs is elastic. Inelastic supply exists when the quantity supplied changes by a smaller percentage than price—that is, when the numerator changes by less than the denominator. Finally, unit-elastic supply exists when the quantity supplied changes by the same percentage as price—that is, when the numerator changes by the same percentage as the denominator. Defining Terms 1. Define: a. elastic supply b. inelastic supply c. per-unit cost d. subsidy e. quota f. technology Reviewing Facts and Concepts 2. Identify what happens to a given supply curve as a result of each of the following: a. Resource prices fall. b. Technology advances. c. A quota is repealed. Elasticity of Supply Exhibit 5-6 reviews the definitions of elastic, inelastic, and unit-elastic supply. Firm A currently produces 400 skateboards a day at $50 a...
View Full Document

This document was uploaded on 01/16/2014.

Ask a homework question - tutors are online