Professional Documents
Culture Documents
Chapter 9
Chapter 9
Chapter 9
NOTE:
% ∆ 𝐐𝐒
PES =
%∆𝐏
𝟑𝟎%
=
𝟓𝟎%
= 0.60 (price inelastic supply)
Price Quantity
Old 20 100
New 25 180
% ∆ 𝐐𝐒
PES = %∆𝐏
𝟏𝟖𝟎 − 𝟏𝟎𝟎
𝟏𝟎𝟎
× 𝟏𝟎𝟎
= 𝟐𝟓 − 𝟐𝟎
×𝟏𝟎𝟎
𝟐𝟎
% ∆ 𝐐𝐒
PES =
%∆𝐏
𝟕𝟓 − 𝟏𝟎𝟎
× 𝟏𝟎𝟎
𝟏𝟎𝟎
= 𝟏𝟓 − 𝟐𝟎
𝟐𝟎
×𝟏𝟎𝟎
−𝟐𝟓
= −𝟐𝟓
Price Quantity
Old 20 100
New 25 100
% ∆ 𝐐𝐒
PES =
%∆𝐏
𝟏𝟎𝟎 − 𝟏𝟎𝟎
× 𝟏𝟎𝟎
𝟏𝟎𝟎
= 𝟐𝟓 − 𝟐𝟎
𝟐𝟎
×𝟏𝟎𝟎
𝟎
= 𝟐𝟓
Price Quantity
Old 25 100
New 25 150
% ∆ 𝐐𝐒
PES =
%∆𝐏
𝟏𝟓𝟎− 𝟏𝟎𝟎
× 𝟏𝟎𝟎
𝟏𝟎𝟎
= 𝟐𝟓 − 𝟐𝟓
𝟐𝟓
×𝟏𝟎𝟎
𝟓𝟎
= 𝟎
Overall, in the short run, agricultural goods tend to be more inelastic in supply than manufactured goods.