Analyzing Data In May, Montclair Electronics sold 100...

Analyzing Data In May, Montclair Electronics sold 100 portable DVD players at $\$ 150$ each. High consumer demand at the start of the summer travel season increased the price to $\$ 180 .$ In June, the store sold 115 DVD players at the higher price. Is the supply of DVD players elastic or inelastic? Show your math calculations to support your answer

Key Concepts

Percentage Change Calculation

This concept involves determining the proportional change in either quantity or price. It is typically computed by taking the difference between the new and original values, dividing by the original value, and then converting to a percentage. This calculation is a fundamental step in deriving the elasticity measure, as it provides the necessary changes in the variables needed for the elasticity formula.

Elastic vs Inelastic Supply

In economics, supply is considered elastic if the price elasticity of supply is greater than one, meaning that the percentage change in quantity supplied is greater than the percentage change in price. Conversely, it is inelastic if the elasticity is less than one, which indicates a smaller responsiveness in quantity supplied relative to the change in price. This classification is essential for predicting how supply will adjust in response to market changes.

Price Elasticity of Supply

This concept measures how responsive the quantity supplied of a good is to a change in its price. It is calculated by dividing the percentage change in quantity supplied by the percentage change in price. It is an important metric for understanding producers' reactions to market price movements and helps determine whether a supply is sensitive (elastic) or not very sensitive (inelastic) to price changes.

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