Reference: Ref 5-3 (Figure: Slave Redemption and Elasticity) Refer to the figure. How many new slaves are captured after the redemption program is installed?
A) 1,400
B) 800
C) 400
D) 1,000

Question

Reference: Ref 5-3 (Figure: Slave Redemption and Elasticity) Refer to the figure. How many new slaves are captured after the redemption program is installed?
A) 1,400 
B) 800 
C) 400 
D) 1,000

Quizplus · Accepted Answer

The figure shows that before the redemption program, the quantity of slaves supplied was 1,800 at a price of $30 per slave, indicating an elasticity of supply of 1.5 (18,000/30=600; 600/400=1.5). After the program, the price of slaves increased to $40 per slave, and the quantity supplied decreased to 1,400. Using the same elasticity formula, we can calculate that the change in quantity supplied was 0.875 (14,000/40=350; 350/400=0.875). To find the number of new slaves captured, we subtract the new quantity supplied from the old quantity supplied: 1,800-1,400=400. Therefore, the answer is C.

Reference: Ref 5-3 (Figure: Slave Redemption and Elasticity) Refer to the Figure