Example: The price of canned pumpkin increases from $1.00 to $1.50 (50% increase) at the start...
Example: The price of canned pumpkin increases from $1.00 to $1.50 (50% increase) at the start of November. The equilibrium quantity sold at a local market increases from 200 in October to 400 in November (100% increase).
This seems to be due to an increase (shift) in demand, but the supply curve has not changed. Then both of these points are on the supply curve.
Based on this data, it seems like the price elasticity of _______ is _______
A. Supply.2
B. Supply, 4.
C. Demand, -2
D. Demand, 4
Homework Answers
Correct option is (A).
Since supply curve has not changed (shifted), these points represent movement along the supply curve.
Elasticity of supply = % Change in quantity supplied / % Change in price = 100% / 50% = 2
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