Consider the perfectly competitive spice market. At the equilibrium price, the elasticity of market supply is 0.52 and the elasticity of demand is 2.56. An increase in production costs cause the market PRICE of spices to rise by 3%. What is the percentage change in market QUANTITY?

Consider the perfectly competitive spice market. At the equilibrium price, the elasticity of market supply is 0.52 and the elasticity of demand is 2.56. An increase in production costs cause the market PRICE of spices to rise by 3%. What is the percentage change in market QUANTITY?

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter6: Elasticities

Section: Chapter Questions

Problem 18P: Using the midpoint formula for calculating the elasticity of supply, if the price of a good rose...

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Question

Some microeconomics questions, thank you for answering：）

Consider the perfectly competitive spice market. At the equilibrium price, the
elasticity of market supply is 0.52 and the elasticity of demand is 2.56.
An increase in production costs cause the market PRICE of spices to rise by 3%.
What is the percentage change in market QUANTITY?

Your research into the spice market gives you data on market supply in the table
below. What is the supply elasticity when the QUANTITY of spice changes from 253
to 382 kilos, all else held constant?
Price
Quantity
per
supplied in
kilo
kilos
$3 180
$8 253
$15 382

Study of decisions made by households and business firms at an individual level. It includes several laws and theorems related to demand, supply, production, allocation of resources, and prices.

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