Chapter 6, Problem 9P

To determine

To Explain:

The nature of the elasticity of supply in the following situations:

1. This summer, a rise in demand for luxury cruises results in a huge increase in the sales price of a cabin on the Queen Mary 2.
2. The price of a kilowatt of electricity is the same during the period of high electricity demand as during the period of low electricity demand.
3. A very small number of people want to fly during the month of February than during any other month. The airlines cancel about 10% of their flights as ticket prices decrease about 20% during February.
4. Owners of vacation homes in Marine rent them out during the summer. Due to down turn in the economy this year, a 30 % decline in the price of a vacation rental leads more than half of hometowns to occupy their vacation homes themselves during the summer.

Concept Introduction:

Elasticity of Supply:

The degree of responsiveness of quantity supplied in response to the change in the price of the product.