Compute the own-price elasticity of supply for beef

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Reference no: EM131242396

Suppose that beef supply is such that Q = 20 billion lb are produced if the price is P = $2.00/lb, and Q = 24 billion lb are produced if the price is P = $2.30/lb.

a. Assuming that the beef supply can be represented by a linear equation going through these two quantity-price combinations, calculate such equation. (Hint: Supply is P = a + b Q, and you need to calculate “a” and “b”.)

b. Use a computer spreadsheet (e.g., Excel) to graph the supply curve you obtained in (a) above, plotting Q on the horizontal axis and P on the vertical axis.

c. Using the two quantity-price combinations reported in (3) above, compute the own-price elasticity of supply for beef. Is the beef supply elastic or inelastic?

Reference no: EM131242396

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