Why is long-run price elasticity of supply greater than short-run price elasticity of supply?
Answer to relevant QuestionsSuppose, at a party for economics majors, you win a choice among three mystery boxes. You don't know what each contains, but you know that each box has a pair of gifts. You know that one box has a CD and a pair of ...Consulting the graph above, calculate the price elasticity of supply of razors for a price change from $2 to $3. An auto mechanic says to you, "I know you like your car and derive great satisfaction driving it. But if I were you, 1 wouldn't put another penny into it." Explain his reasoning in terms of utility analysis. Suppose the following exhibit expresses your demand schedule for flowers: How much consumer surplus would you derive if price were $2? Using marginal utility analysis, explain what is meant by consumer surplus. How do you view minimum wage laws? (A wage is the "price" of labor.) Do minimum wages rep resent price floors or price ceilings? Can you make a case for them? A case against them?
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