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10 June, 07:37

A shoe factory han an elasticity of supply of. 5 as the price of the shoes rises from $50 to $75. if the factory produced 100,000 shoes at a market price how many will be produced at the new price

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  1. 10 June, 09:30
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    E S (elasticity of supply) =.5 (supply is inelastic: E S < 1)

    The formula is:

    E S = Δ Q / Δ P * P / Q,

    where: Δ Q is the change in quantity, Δ P is change in price, P is initial price and Q is initial quantity.

    .5 = Δ Q / 25 * 50 / 100,000

    Δ Q =.5 * 25 * 100,000 / 5

    Δ Q = 25,000

    Quantity at the new price: Q (new) = 100,000 + 25,000 = 125,000
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