Use the mid-point formula to calculate the price elasticity of supply (arc elasticity) for a given product under two scenarios:
a) When the price of a good is $100, 25 units are supplied. But when the price increases to $125, 30 units are supplied.
b) When the price of a good is $100, 25 units are supplied. But when the price decreases to $125, 35 units are supplied.
Which case is more likely to happen in the long-run? Explain why.