13. Pharmaceutical drugs have an inelastic demand, and computers have an elastic demand. Suppose that technological advance doubles the supply of both products (that is, the quantity supplied at each price is twice what it was). a. What happens to the equilibrium price and quantity in each market? b. Which product experiences a larger change in price? c. Which product experiences a larger change in quantity? d. What happens to total consumer spending on each product?
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- Inelastic demand: Quantity demanded changes little with price changes. - Elastic demand: Quantity demanded changes significantly with price changes. Show more…
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The accompanying table gives part of the supply schedule for personal computers in the United States. $$ \begin{array}{c|c} \text { Price of computer } & \text { Quantity of computers supplied } \\ \$ 1,100 & 12,000 \\ 900 & 8,000 \end{array} $$ a. Calculate the price elasticity of supply when the price increases from $\$ 900$ to $\$ 1,100$ using the midpoint method. Is it elastic, inelastic or unit-elastic? b. Suppose firms produce 1,000 more computers at any given price due to improved technology. As price increases from $\$ 900$ to $\$ 1,100$, is the price elasticity of supply now greater than, less than, or the same as it was in part a? c. Suppose a longer time period under consideration means that the quantity supplied at any given price is $20 \%$ higher than the figures given in the table. As price increases from $\$ 900$ to $\$ 1,100,$ is the price elasticity of supply now greater than, less than, or the same as it was in part a?
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