A demand function is given by the equation Q = 112 – 3P. Suppose the price...

Question

Question

A demand function is given by the equation Q = 112 – 3P.

Suppose the price is P = 15.

At this price, find the price elasticity of demand. USE THE POINT SLOPE METHOD to find this elasticity. Round your answer to the nearest tenth.

Answer 1

Answer #1

Answer

price elasticity of demand=(dQ/dP)*Q

dQ/dP=-3 ............. first differentiation of demand function

P=15

Q=112-3*15

=67

price elasticity of demand=(-3)*(15/67)

=-0.671641791

=-0.67

the demand is inelastic as the elasticity of demand is above -1.

Answer 2

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