The accompanying table gives part of the supply schedule for personal computers in the United States.\begin{array}{c|c} ext { Price of computer } & ext { Quantity of computers supplied } \\ 1,100 & 12,000 \900 & 8,000\end{array}a.Calculatethepriceelasticityofsupplywhenthepriceincreasesfrom\900 to 1,100usingthemidpointmethod.Isitelastic,inelasticorunit−elastic?b.Supposefirmsproduce1,000morecomputersatanygivenpriceduetoimprovedtechnology.Aspriceincreasesfrom\900 to 1,100,isthepriceelasticityofsupplynowgreaterthan,lessthan,orthesameasitwasinparta?c.Supposealongertimeperiodunderconsiderationmeansthatthequantitysuppliedatanygivenpriceis20 \%higherthanthefiguresgiveninthetable.Aspriceincreasesfrom\900 to \\ 1,100,$ is the price elasticity of supply now greater than, less than, or the same as it was in part a?

Question

The accompanying table gives part of the supply schedule for personal computers in the United States.\begin{array}{c|c}	ext { Price of computer } & 	ext { Quantity of computers supplied } \\ 1,100 & 12,000 \900 & 8,000\end{array}a.Calculatethepriceelasticityofsupplywhenthepriceincreasesfrom\900 to  1,100usingthemidpointmethod.Isitelastic,inelasticorunit−elastic?b.Supposefirmsproduce1,000morecomputersatanygivenpriceduetoimprovedtechnology.Aspriceincreasesfrom\900 to  1,100,isthepriceelasticityofsupplynowgreaterthan,lessthan,orthesameasitwasinparta?c.Supposealongertimeperiodunderconsiderationmeansthatthequantitysuppliedatanygivenpriceis20 \%higherthanthefiguresgiveninthetable.Aspriceincreasesfrom\900 to \\ 1,100,$ is the price elasticity of supply now greater than, less than, or the same as it was in part a?

Filo · Accepted Answer

Key Concepts: Price Elasticity Of Supply, Midpoint Method, Elasticity Classification, Long-Run Elasticity Of Supply, Shift In Supply

Explanation:
The problem involves calculating the price elasticity of supply for personal computers in the United States using the midpoint method. Additionally, it requires determining the classification of the elasticity as elastic, inelastic or unit-elastic. The problem also requires an analysis of the effect of a technological improvement and a long-run time frame on the price elasticity of supply.

Step by Step Solution:
Step 1. Calculate the percentage change in quantity supplied

Step 2. Calculate the percentage change in price

Step 3. Use the formula e = (Percentage Change in Quantity Supplied)/(Percentage Change in Price) to determine the price elasticity of supply using the midpoint method

Step 4. Classify the elasticity as elastic if e > 1, inelastic if e < 1, and unit-elastic if e = 1

Step 5. Determine the effect of the technological improvement and a long-run time frame on the price elasticity of supply

Question Text	The accompanying table gives part of the supply schedule for personal computers in the United States.\begin{array}{c\|c}\text { Price of computer } & \text { Quantity of computers supplied } \\\ 1,100 & 12,000 \\900 & 8,000\end{array} $a . C a l c u l a t e t h e p r i cee l a s t i c i t yo f s u ppl y w h e n t h e p r i ce in cre a ses f ro m$ \ $900$ to 1,100 $u s in g t h e mi d p o in t m e t h o d . I s i t e l a s t i c, in e l a s t i cor u ni t - e l a s t i c ? b . S u pp ose f i r m s p ro d u ce 1, 000 m oreco m p u t ers a t an y g i v e n p r i ce d u e t o im p ro v e d t ec hn o l o g y . A s p r i ce in cre a ses f ro m$ \ $900$ to 1,100, $i s t h e p r i cee l a s t i c i t yo f s u ppl y n o w g re a t er t han, l ess t han, or t h es am e a s i tw a s in p a r t a ? c . S u pp ose a l o n g er t im e p er i o d u n d erco n s i d er a t i o nm e an s t ha tt h e q u an t i t ys u ppl i e d a t an y g i v e n p r i ce i s$ 20 \% $hi g h er t han t h e f i gu res g i v e nin t h e t ab l e . A s p r i ce in cre a ses f ro m$ \ $900$ to \\\ 1,100,$ is the price elasticity of supply now greater than, less than, or the same as it was in part a?
Topic	All Topics
Subject	Economics
Class	Class 12
Answer Type	Text solution:1

Text solutionVerified

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