The price of skateboards increases to 55 a skateboard

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Unformatted text preview: skateboard. The price of skateboards increases to $55 a skateboard and the firm then starts producing 420 skateboards a day. Because the quantity supplied of skateboards goes up (5%) by a smaller percentage than the price of skateboards rises (10%), the supply of skateboards is inelastic. EXAMPLE: d. A tax on the production of a good is repealed. 3. If supply increases, does the supply curve shift to the right or to the left? 4. Identify whether a given supply curve will shift to the right or to the left as a result of each of the following: a. Resource prices rise. b. A quota is placed on a good. 5. Give a numerical example that illustrates elastic supply. elastic supply The kind of supply that exists when the percentage change in quantity supplied is greater than the percentage change in price. inelastic supply The kind of supply that exists when the percentage change in quantity supplied is less than the percentage change in price. Critical Thinking 6. The previous section explained how a supply curve can be...
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This document was uploaded on 01/16/2014.

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