Question

World renowned fashion designer Alvin Stein died recently. His company, Alvin Stein Designs has released the last 100 pair of his signature ASD Original jeans. The pattern and design sketches for the ASD Originals were buried with Alvin, per his last wishes. The current price of a pair of ASD Originals is $10,000.

• What is the current price elasticity of supply for a pair of ASD Originals? Explain your answer.
• Five years after his death, Alvin’s sister, Jan released an exact replica of the signature jeans, called ASD Original 2.0, priced at $5000. How might this affect the demand for the remaining 50 pairs of ASD Originals, still retailing for $10,000?
• Ten years after Alvin’s death, a vault is discovered containing 1000 pairs of ASD Originals. How might this discovery affect the demand for the remaining 30 pairs of ASD Originals? How might this affect the price elasticity of supply for the ASD Original 2.0 jeans?

Answer 1