Assume the supply for good x is estimated is good x storable

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Reference no: EM1327757

Description of price elasticity of supply

Suppose the supply for good x is estimated by the following equation:

Q(x) supplied = 4 + 0.8P(x) - 0.2P(x)expcted - 0.4W

Where;
Q(x) supplied = quantity supplied of x
P(x) = current average good of x
P(x) expected = expected price of good x
W = average wage rate

Suppose;
P(x) = $5
P(x) expected = $6
W = $4.5

a) calculate the price elasticity of supply for x [slope * (P(x)/Q(x)]. What type of elasticity is this?

b) Is good x storable? Explain numerically the data you are using to suppor answer?

Reference no: EM1327757

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