Elasticity Questions?
1. Suppose you're shopping for flowers and you encounter various firms at the market. Explain whether you would expect the elasticity of supply to be highly elastic or inelastic for fresh cut flowers and why?
2. Explain why the demand for frozen fish sticks may be more price elastic in the short run than in the long run.
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I'm still working on one and am having some trouble figuring it out (my brain is completely fried right now running on no sleep).
For number 2, is it because in the latter case you have a longer time horizon which means you can find substitutes to replace the frozen fishticks?
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Elasticity of supply depends on a lot of factors,season,transportation,shelf life of flowers ,humidity etc.Large number of flower dealers indicate that the supply is fairly elastic.The major question is that whether a mere increase in purchase price will increase supply/availability.For example in rainy season roses will be out of supply what ever be the price.Secondly it is not a free market actually.In many places ,the flower dealers have an association who fix daily sale price.
People prefer fresh fish.The demand for frozen sticks depends largely on the non availability of good fresh fish.The supply of forzen products is rather steady so it should be more price elasic.The long run price of frozen products are stable due to certainty of market and low loss due to price fluctuation.There is pratically there is no substitution effect between fish products and meat products.