Question

Related to Application: The Short-Run and Long-Run Elasticity of Supply of Coffee Short Run vs. Long Run in the Pear Market. Suppose in the production of pears, the short-run supply elasticity is 0.25, while the long-run supply elasticity is 3.60. In the short run, a 20.00% increase in the price of pears will cause the quantity supplied of pears to O A. fall by 3.50 percent. O B. fall by 5.00 percent. O C. rise by 3.50 percent. OD. rise by 5.00 percent. In the long run, a 20.00% increase in the price of pears will cause the quantity supplied of pears to O A. rise by 72.00 percent. OB. fall by 43.20 percent. O C. fall by 72.00 percent. OD. rise by 43.20 percent. Click to select your answer.

Answer 1

1.%change in quantity supplied=Es*%change in price

%change in quantity supplied=0.25*20%

Answer-5%

Since quantity and price are directly related,a rise in price will increase quantity supplied.

Answer-D

2.%change in quantity=3.60*20=72%

Answer-A