Consider a market with a demand curve of P = 164–q and a supply curve of P = 3q. 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).
164 - q = 3q
This simplifies to:
4q = 164
So, q = 41.
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