Question 3 of 3 Map pling Consider two markets. The initial equilibrium for both

Question

Question 3 of 3 Map pling Consider two markets. The initial equilibrium for both markets is the same, P $4.50, and Q 31.0. When the price is $9.75, the quantity supplied of motorcycles is 69.0 and the quantity supplied of pancakes is 101.00. The demand for both goods is the same (for simplicity of analysis). Use this information to answer the questions below: Usi ng the midpoint formula, calculate the elasticity of supply for pancakes? Please round to two decimal places Number Supply in the market for motorcycles is O less elastic than supply in the market for pancakes. There is not enough information to tell which will has a higher elasticity. O the same elasticity as supply in the market for pancakes. O more elastic than supply in the market for pancakes.

Explanation / Answer

Elasticity of supply by mid-point method:

Es = Change in the quantity supplied /( Q1 + Qt) / 2 / Change in price / (P1 + Pt) / 2

Elasticity of Pancakes:

Es = (101 – 31) / [(31 + 101) / 2] / (9.75 – 4.50) / [(4.50 + 9.75) / 2]

Es = 70 / 132 / 2 divided by 5.25 / [14.25 / 2]

Es = 70 / 66 divided by 5.25 / 7.025 = 1.16 / 0.747

Elasticity of supply for pancakes = 1.55.

* Supply in the market for motorcycles is:

# less elastic than supply in the market for pancakes.

*****

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