Consider a market with a demand curve of P 198-q and a supply curve of P=4q.What is the price elasticity of supply at the market equilibrium?
Question
Solution 1
To find the price elasticity of supply at the market equilibrium, we first need to find the equilibrium price and quantity.
Step 1: Set the demand and supply equations equal to each other to find the equilibrium quantity (q).
198 - q = 4q
This simplifies to:
198 = 5q
So, q = 198/5 = 39.6
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