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Elasticity

a) Find the elasticity of the demand function q + 2p = 5000 when p = $1000, and q = 3000.
b) How would revenue be affected by a price increase?

1 answer

dq/dp=-2

E= p/q * dq/dp= 1/3 * -2=-2/3

so if you increased prices, demand decreases.

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