In 2002, the price of asparagus crashed from $45 a crate to $15 a crate.

A typical Californian asparagus farmer supplies 2,000 crates a day at $45 a crate, but at $15 a crate would plow the crop into the ground and supply nothing.

1) Using the information above, what is the price elasticity of Californian asparagus? (Round your answer to 1 decimal place)

2) If the price of asparagus remains at $15 a crate, what would happen to the elasticity of supply over the coming years?

A) Become more elastic

B) Become unit elastic

C) Become less elastic

D) Not change

1) Using the information above, what is the price elasticity of Californian asparagus? (Round your answer to 1 decimal place)

Price elasticity of supply is expressed as where is supply and is price.

When price changes from $45 to $15, denoted by , supply changes from 2000 crates to 0 crated denoted by .

Since elasticity if greater than 1, then the supply of Californian asparagus is price elastic.

2) If the price of asparagus remains at $15 a crate, what would happen to the elasticity of supply over the coming years?

Now, if the price remains $15 the following year, it means that change in price is $0. Since nothing is supplied at $15, it means that the change in quantity is also zero. Thus, which is undefined or larger than any finite number. Since nothing will be taken to the market, then this would mean compared to the previous year, the elasticity will become more elastic.

Answer: A) Become more elastic