what is the short run price elasticity of supply and what is

what is the short run price elasticity of supply and what is the long run price elasticity of supply?

Question Help An increase in the market price of men\'s haircuts, from $16 per haircut to $26 per haircut, initially causes a local barbershop to have its employees wo overtime to increase the number of daily haircuts provided from 45 to 50 When the $26 market price remains unchanged for several weeks and all other things remain equal as well, the barbershop hires additional employees and provides 65 haircuts per day what is the short-run price elasticity of supply?(Your answer shouid nave two decimal places ) Wor ent S mpts hom Quest

Solution

The formula for the elasticity of supply is e= % change in quantity supplied / % change in price

Short run price elasticity: Change in price = $26 - $16 / $16 = 62.5 %

   Change in quantity = 50 - 45 / 45 = 11.11%

Elasticity of supply = 11.11 / 62.5 = 0.178

Long run price elasticity: Change in quantity = 65 - 45 / 45 = 44.44%

Long run elasticity of supply = 44.44 / 62.5 = 0.711

The long run elasticity of supply is greater than the short run elasticity of supply.