The market demand for a gallon of Kikkamoo Joy Juice is Q = 1000 – 50P....
The market demand for a gallon of Kikkamoo Joy Juice is Q = 1000 – 50P. The owner, Grandma Yocum, wants to produce where the elasticity of demand is unity. What price should she charge and what quantity should be sold to achieve that goal?
Homework Answers
Ed= (dQ/dP)*(P/Q)
-1=-50*P/1000 – 50P. (The elasticity is expressed. in negative because of negative relation between price and quantity demanded)
1000 – 50P = 50P (simplification or cross multiplication)
100P = 1000
P = 1000/100 = $10
Q = 1000-50*10 = 500
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The market demand for a gallon of Kikkamoo Joy Juice is Q = 1000
– 50P....
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