Own-Price Elasticity of Supply (Es).
Suppose that the price of pizza increases from P0=USD 6/pizza to P1=USD 10/pizza, resulting in an increase in pizzas produced from Q0= 10 pizzas to Q1= 12 pizzas.
A. Calculate ε at the initial values of P and Q.
B. Is pizza supply elastic or inelastic? Demonstrate and explain.
C. Is the pizza firm in the immediate run, short run, or long run? Explain.
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