Table of contents

0. Basic Principles of Economics1h 5m
1. Reading and Understanding Graphs59m
2. Introductory Economic Models1h 10m
3. The Market Forces of Supply and Demand2h 26m
4. Elasticity2h 26m
5. Consumer and Producer Surplus; Price Ceilings and Floors3h 45m
6. Introduction to Taxes and Subsidies1h 46m
7. Externalities1h 12m
8. The Types of Goods1h 13m
9. International Trade1h 16m
10. The Costs of Production2h 35m
11. Perfect Competition2h 23m
12. Monopoly2h 13m
13. Monopolistic Competition1h 9m
14. Oligopoly1h 26m
15. Markets for the Factors of Production1h 26m
16. Income Inequality and Poverty35m
17. Asymmetric Information, Voting, and Public Choice39m
18. Consumer Choice and Behavioral Economics1h 16m

4. Elasticity

Price Elasticity of Supply

Microeconomics

4. Elasticity

Price Elasticity of Supply

Previous problem

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Multiple Choice

If a decline in the price of flags $9 to $7, caused by a shift in the demand curve, decreases the quantity of flags supplied from 5,500 to 4,500, the:

Demand for flags is elastic

Supply of flags is elastic

Demand for flags is inelastic

Supply of flags is inelastic

Previous problem

Verified step by step guidance

Understand the concept of elasticity: Elasticity measures how much the quantity demanded or supplied responds to changes in price. If the quantity changes significantly with a small change in price, it is elastic. If it changes little, it is inelastic.

Identify the given data: The price of flags decreases from $9 to $7, and the quantity supplied decreases from 5,500 to 4,500.

Calculate the percentage change in price: Use the formula for percentage change, which is ((new value - old value) / old value) * 100. Here, it would be ((7 - 9) / 9) * 100.

Calculate the percentage change in quantity supplied: Similarly, use the formula for percentage change, which is ((new quantity - old quantity) / old quantity) * 100. Here, it would be ((4,500 - 5,500) / 5,500) * 100.

Determine elasticity: Compare the percentage change in quantity supplied to the percentage change in price. If the percentage change in quantity supplied is less than the percentage change in price, the supply is inelastic.