QUESTION 2

The following graph shows the supply curve of staplers. Use the graph to answer the questions below.

Suppose that the price of staplers decreased from $3 to $2 per stapler. Use the midpoint formula to calculate the price elasticity of supply of staplers between these two prices. Is the supply of staplers elastic or inelastic between these two prices?

The slope of a linear supply curve is constant along the supply curve. If you calculate the price elasticity of supply of staplers between two other price levels different from the ones given in part a), would you get the same or different answer? Why?