Solution libraryQuestion: 750968
Question(s) / Instruction(s):
Elasticity Analysis Currently, 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 increase from $1 to $2 is unit-elastic (Es = 1.0). So how many popsicles will be sold each day in the short run if the price rises to $2 each? In the long run, a price increase from $1 to $2 has an elasticity of supply of 1.50. So how many popsicles will be sold per day in the long run if the price rises to $2 each? Apply the midpoint approach to the elasticity of supply. Answer Summary Solution describes the steps to calculate the new sale levels following the changes in price with the help of midpoint formula of elasticity.