In the short run, demand is more price inelastic than in the long run due to the limited time available to find an alternative
Please find attached the graph showing the supply curved 'dragged' to show the effect of the price drop
The reason the above graph is correct is as follows:
The data in the given curves are presented as follows;
Short run demand line, DLR, points: (4, 13), (5, 11)
Therefore, the slope of DLR = (11 - 13)/(5 - 4) = -2
The equation of DLR is y - 13 = -2 × (x - 4)
y = -2·x + 8 + 13 = -2·x + 21
y = -2·x + 21
The equation for the supply line is given as follows:
Points on the supply line: (14, 14), (7, 7)
The slope of the supply line = (7 - 14)/(7 - 14) = 1
The equation of the supply line is y - 7 = x - 7
y = x
When y = 3, the value of x on the supply line is given as follows;
3 = -2·x + 21
2·x = 21 - 3 = 18
x = 18/2 = 9
x = 9
The equation of the supply line passing through the point (9, 3) is given as follows;
y - 3 = x - 9
y = x - 9 + 3 = x - 6
y = x - 6
The equation of the supply line shifted by dragging, [tex]S_s[/tex] is y = x - 6
The new intersection point showing the effect of the price drop is given by plotting both equations on a graph as shown in the attached graph created with MS Excel
Learn more about short run demand and supply here:
https://brainly.com/question/13129078
