question archive Currently, at a price of $1 each 100 popsicles are sold per day in the perpetually hot town of Rostin

Currently, at a price of $1 each 100 popsicles are sold per day in the perpetually hot town of Rostin

Subject:EconomicsPrice:2.88 Bought3

Currently, at a price of $1 each 100 popsicles are sold per day in the perpetually hot town of Rostin. Consider the elasticity of supply.

In the short run, a price increase from $1 to $2 is unit-elastic (E1 = 1.0).

So how many popsicles will be sold each day in the short run if the price rises to $2 each? In the long run, a price increase from $1 to $2 has an elasticity of supply of 1.50.

So how many popsicles will be sold per day in the long run if the price rises to $2 each? (Hint: Apply the midpoints approach to the elasticity of supply)

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