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(Solved): Consider two markets: the market for cat food and the market for snake oil. The initial equilibrium ...
Consider two markets: the market for cat food and the market for snake oil. The initial equilibrium for both markets is the same:
P=$5.50, and Q=25 units.
Cat Food: P=.25Q^(S)+1.5
Snake Oil: P=0.1Q^(S)+3.4
What is the elasticity of supply for both goods at EQBM?
Cat Food: \epsi S=
Snake Oil \epsi S=
Supply in the market for cat food is
less elastic than supply in the market for snake oil.
There is not enough information to tell which has a higher elasticity.
the same elasticity as supply in the market for snake oil.
more elastic than supply in the market for snake oil