Answer to Question #105644 in Economics for Anthony Nguyen

Question

Dell has gone through some market challenges these past few years, especially with the desktop market. If the prices of desktop computers decreased by 14% last quarter resulting in an increase of 12% in quantity demanded, then Dell will decrease the quantity supplied of desktops by 10%. What is the price elasticity of supply for Dell desktops?

Answer 1

The price elasticity of supply for Dell desktops is: Es = 10%/14% = 0.714, so the supply is inelastic.