Consider the elasticity of supply

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Q. Presently, at a price of $1 each, 100 popsicles are sold per day in the perpetually hot town of Rostin. Consider the elasticity of supply. In the short run, a price rise from $1 to $2 is unit-elastic (Es = 1.0). In the long run, a price rise from $1 to $2 has an elasticity of supply of 1.50.

Q. Assume a consumer is presently buying a positive amount of good 1. also her elasticities are E(x1,p1)= E(x2,p1)=. . .= E(xn,p1)= 0.

a) Elucidate in words Illustrate what this means.

b) Does this make sense? Explain why or explain why not?

Reference no: EM1319389

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