Answer:
a. 1.08
b. Supply in the market for motorcycles is less elastic than supply in the market for pancakes.
Step-by-step explanation:
Note: This question is not complete. The complete question is therefore provide before answering the question as follows:
Consider two markets: the market for motorcycles and the market for pancakes. The initial equilibrium for both markets is the same, the equilibrium price is $3.50 , and the equilibrium quantity is 29.0 . When the price is $11.75 , the quantity supplied of motorcycles is 57.0 and the quantity supplied of pancakes is 111.0 . For simplicity of analysis, the demand for both goods is the same.
a. Using the midpoint formula, calculate the elasticity of supply for pancakes? Please round to two decimal places.
b. Supply in the market for motorcycles is:
o. less elastic than supply in the market for pancakes.
o. More elastic than supply in the market for pancakes.
o. There is no enough information to tell which will have a higher elasticity.
o. The same elasticity as supply in the market for pancakes.
The explanation to the answers is now given as follows:
a. Using the midpoint formula, calculate the elasticity of supply for pancakes? Please round to two decimal places.
The elasticity of supply for pancakes can be calculated as follows:
Percentage change in quantity of pancakes supplied = ((New supply - Old supply) / ((New supply + Old supply) / 2)) * 100 = ((111 - 29) / ((111 + 29) / 2)) * 100 = 117.142857142857%
Percentage change in price of pancakes = ((New price - Old price) / ((New price + Old price) / 2)) * 100 = ((11.75 - 3.5) / ((11.75 + 3.5) / 2)) * 100 = 108.196721311475%
Therefore, we have:
Elasticity of supply of pancakes = Percentage change in quantity of pancakes supplied / Percentage change in price of pancakes = 117.142857142857% / 108.196721311475% = 1.08268398268398 = 1.08
Therefore, the elasticity of supply of pancakes is about 1.08. Note that since the price elasticity of demand of about 1.08 is greater than 1, it implies that the relationship between the quantity supplied and the price of pancakes is elastic.
b. Supply in the market for motorcycles is:
This can be determined by calculating the elasticity of supply for motorcycles and compare it with that of pancakes follows:
Percentage change in quantity of motorcycles supplied = ((New supply - Old supply) / ((New supply + Old supply) / 2)) * 100 = ((57 - 29) / ((57 + 29) / 2)) * 100 = 65.1162790697674%
Percentage change in price of motorcycles = ((New price - Old price) / ((New price + Old price) / 2)) * 100 = ((11.75 - 3.5) / ((11.75 + 3.5) / 2)) * 100 = 108.196721311475%
Therefore, we have:
Elasticity of supply for motorcycles = Percentage change in quantity of motorcycles supplied / Percentage change in price of motorcycles = 65.1162790697674% / 108.196721311475% = 0.601832276250881 = 0.60
Therefore, the elasticity of supply of motorcycles is about 0.60. Note that since the price elasticity of demand of about 0.60 is less than 1, it implies that the relationship between the quantity supplied and the price of motorcycles is inelastic.
Conclusion:
Based on the calculation above, supply in the market for motorcycles is less elastic than supply in the market for pancakes.
The reason is that the relationship between the quantity supplied and the price of pancakes is elastic but the relationship between the quantity supplied and the price of motorcycles is inelastic.