Question

1. The table below gives part of the supply schedule for personal computers in the United States.

Price	Quantity Supplied before tech change	Quantity Supplied after tech change
$1,100	12,000	13,000
$900	8,000	9,000

a) Calculate the price elasticity of supply when price rises from $900 to $1,100 using the arc elasticity formula (the midpoint method).
b) Now suppose that technology changes such that at every price, 1000 more computers are supplied.   Now, as prices rise from $900 to $1,100, is the elasticity of supply smaller than, larger than, or equal to the elasticity in part a)?
c) Does the change in b) change the slope of the supply curve? Are slope and elasticity the same thing? Explain.

Answer 1