Suppose the quantity supplied of computers increases from 2 million to 4 million units as the price of a computer increases from $600 to $700. What does the price elasticity of supply equal?
What will be an ideal response?
The price elasticity of supply = (percentage change in the quantity supplied) ÷ (percentage change in the price). Use the midpoint method to calculate the percentages. Thus the percentage change in the quantity supplied = (4,000,000 - 2,000,000 ) ÷ (3,000,000 ) = 66.7 percent and the percentage change in the price is ($700 - $600 ) ÷ ($650 ) = 15.4 percent. Therefore the elasticity of supply equals (66.7 percent) ÷ (15.4 percent) = 4.33.
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A) there are more households with incomes below the mean income than above the mean income. B) there are more households with incomes above the mean income than below the mean income. C) the mode income equals the mean income. D) the income distribution is bell shaped.
?In the long run, wages and prices are considered to be:
A. ?fixed. B. sticky. C. ?flexible. D. ?unstable.