Question

1. From your understanding of the concept of elasticity of supply, what do you think this

paragraph hints at when it comes to making sense of the rising cost of admission at the major

art museums? Use a demand and supply graph to explain this.

In New York, David R. Jones, president and chief executive officer for the Community

Service Society of New York, refers to that city’s high admission fees as “cultural apartheid,”

noting that the “cost of culture . . . has effectively priced out a large segment of the city’s

population.” Bruce J. Altshuler, director of New York University’s Program in Museum

Studies, concurred, adding the Museum of Modern Art’s “attitude towards increasing

attendance by people in the lower and even middle economic strata is implicit in its policy.

The museum is saying, in effect, ‘We’re already at capacity. We don’t need a lot more

people.’ ”

Answer 1

The elasticity of supply measures the change in quantity supplied with a change in the price. When the elasticity is less than 1, the supply elasticity is termed as inelastic. A change in price if does not change the supply of that good then the supply elastic is termed as inelastic. Similarly, if elasticity is more than 1, it is known as elastic and if elasticity is 1, this is known as unit elastic.

In the above example, there is supply inelastic. The price of admission is high so that only rich people can take admission. This reduces the population who are being taught in there. Reducing the admission fee will invite lower and middle-class population also. There is not available faculty in the museum university to facilitate that huge population. hence the supply is inelastic.