?

Microeconomics

Free Version

Upgrade subject to access all content

Moderate

Elasticity: Oven Options

MICRO-8AJXVW

Before the introduction of microwaves, there were not a lot of substitutes for ovens. If you wanted to cook, you pretty much needed an oven. This is the "before" time. At this time, it just so happened that the quantity of ovens demanded was $Q_d=10$.

After the introduction of microwaves, some people would consider microwaves as an acceptable substitute for ovens. This is the "after" time. This changed the demand curve for ovens. After there had been some changes to supply as well, it turned out that $Q_d=10$ in the after time.

You have been handed the demand curves for the "before" and "after" times, but you accidentally mixed up which is which. Using elasticity, determine which of the following two demand curves is "before" and which is "after":

$$P = 100-Q_d$$
$$P = 110-2Q_d$$

(Note: you cannot just look at whether there is "more" or "less" demand before and after, since the neither demand curve is clearly "more" demand than the other - they cross each other!)

A

$P = 100-Q_d$ is "before" and $P = 110-2Q_d$ is "after."

B

$P = 100-Q_d$ is "after" and $P = 110-2Q_d$ is "before."

C

It depends on how supply shifted.

D

There is not enough information to tell.