Answer to Question #139243 in Microeconomics for Carrie Anne Swartz

Question

There is a supply and demand graph, linear. Equilbirum quantity= 30. Equilibrium price= 10. Quantity is 50 and price is 20. The point on the vertical axis which intercepts witht he supply curve = 5.

At equilbrium, the price elasticity of supply is given by?

Answer 1

$$\frac {Q-50}{5-50}=\frac {p-20}{0-20}$$

$$Q=2.25 p+5$$

$$E=Q'_p \times \frac{p}{Q}$$

$$E=2.25\times\frac{10}{30}=0.75$$