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Elasticity

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Currently, at a price of $1 each 100 popsicles are solid 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 (E5=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?

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Elasticity

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Recall that elasticity = (% change in supply)/(% change in price)

Short run,

Price has ...

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