Wolfram Elasticity. Consider the Application Wolfram Miners Obey the Law of Supply. Suppose the initial equilibrium price is $1,144 per ton and the output is 100 tons. (Related to Application 3 on page 528.)
a. Using the numbers related in the Application, draw a supply and demand graph showing the effects of the Allies wolfram-buying program. Your supply curve should be a long-run curve, which incorporates the entry and exit of firms.
b. Using the formula for the elasticity of supply in the earlier chapter on elasticity, compute the price elasticity of supply.