The following graph will represent U.S. dollars on the y-axis and lbs. on the x-
ID: 2494550 • Letter: T
Question
The following graph will represent U.S. dollars on the y-axis and lbs. on the x-axis.
Good X
15) Refer to the figure above. Calculate the price elasticity when more producers expect prices to increase tomorrow leading to a decrease of 4 lbs. in the Good X market.
A) EpD = 1.91
B) EpS = 0.94
C) EpD = 0.94
D) EpS = 1.91
16) From number 15 (point B), calculate the price elasticity when a hurricane strikes leading to a 1 lb. decrease in the Good X market.
A) EpD = 2.90
B) EpS = 0.34
C) EpD = 0.34
D) EpS = 2.90
17) From number 16 (point C), calculate the price elasticity when Americans prefer Good X by 2 lbs.
A) EpD = 0.18
B) EpS = 5.56
C) EpD = 5.56
D) EpS = 0.18
12 So 101 8 6 4 2 Do 5 10 15Explanation / Answer
Multiple questions asked.
Q1 is answered below.
Market equilibrium P=$7 and Q=8 units.
When more producers expect prices to increase, making Q=8-4 = 4 units, then P becomes $9 (SS shifts to the left today)
Thus, Price elasticity of supply = (Change in Q/Change in P)(P/Q)
Price elasticity = (8-4)/(10-7)×(7/8)
Price elasticity = 1.167
Thus, correct option: (D) EpS = 1.91 (approx)
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