Elasticity and Changes in Equilibrium: Answers

In Brief

This page includes solutions to the set of questions related to the Elasticity and Changes in Equilibrium.
This helps learners to ensure their learning on aspects of economics in general but also elasticity and changes in equilibrium in particular.

Consider the following:

The supply of oil is inelastic while the supply of cars is elastic.
Assume population growth provokes demand for both goods to double (at each price, Q^d doubles).

For which product will price (P)change the most?
For which product will quantity (Q) change the most?

Solutions:

If supply is inelastic, then a raise in demand has a bigger effect on price than on quantity.

If supply is elastic, then a raise in demand has a bigger effect on quantity than on price.

For more details, please contact me here.