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Consider the demand curve D(p)=10-3p. What is the elasticity at price 5/3 ? |
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Answer» Solution :GIVEN `Q=10-3P`. When `P=(5)/(3), Q=10-3xx(5)/(3)=5` DIFFERENTIATING Q with respect to P, we get, `(Delta Q)/(Delta P)=-3` We know, `ED=(Delta Q)/(Delta P)xx(P)/(Q)=-3xx(5//3)/(5)` `=-3xx(5)/(3)xx(1)/(5)=[-]1` Negative sign of ED indicates that inverse relationship between price and quantity demanded. PED = 1 [Unitary elastic demand]. |
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