You have the following demand for product X: Q = 200 - 0.30P. At a price...
You have the following demand for product X: Q = 200 - 0.30P. At a price =$100, point price elasticity of demand is about
A) -1.50
B) -0.176
C) can't be determined since the quantity demanded at p = $100 is not known
D) -1.176
Homework Answers
B) -0.176
Explanation: Following is the formula for point elasticity:
dQ/dP * P/Q
dQ/dP = d/dP (200 - 0.30P) = -0.30
When price is 100, Q = 200 - 0.30P = 200 - 0.30*100 = 200 - 30 = 170.
So, P/Q = 100/170 = 0.588
point elasticity = dQ/dP * P/Q = -0.30*0.588 = -0.176
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