STSTEER

Comparative Statics with Inelastic or Perfectly Elastic Supply

Predicting how the equilibrium price moves after cost and demand shocks when supply is fixed or perfectly elastic.

Question template

Consider the market for mooring berths in the only marina on a lake, rented for the summer. The quantity is fixed: the marina has qbar berths, all of which are rented out whatever the price, because no more can be added and every berth is worth offering at any price above its running cost. Demand from boat owners is Q = alpha - betaP, where P is the price per berth in dollars. The cost of maintenance per berth rises from $c0 to $c1, still well below the price, and nothing else changes. By what percentage does the equilibrium price per berth change? Round to two decimals.

Use it

from datasets import load_dataset
ds = load_dataset("narunraman/steer_me", "elastic_inelastic_supply")