The accompanying table gives part of the supply schedule for personal
computers in the United States.
Price of computers
$ 1000
$ 800
Quantity of computers supplied
14,000
9,000
a) Calculate price elasticity of supply when the price increase from
$800 to $1000 using the midpoint method. Is it elastic, inelastic
or unit elastic?
b) Suppose firm produces 1000 more computers at any given price
due to improved technology. As price increases from $800 to
$1000, 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 increase from $800 to $1000, is the
price elasticity of supply now greater than, less than, or the same
as it was in part a?