Question
Given the demand function q=173-5p, determine the price where demand has unit elasticity.
Answers
MathMate
Since the p-q curve has negative slope (which is normal), unit elasticity means -1.
Elasticity = (ΔQ/Q) / (ΔP/P)
=(ΔQ/ΔP) / (P/Q)
=(dQ/dP)*(P/Q)
=-1
dQ/dP = d(173-5P)/dP = -5
Therefore
-5*(P/Q) = -1
-5P = -1(173-5P)
Solve for P to get P=17.3
Elasticity = (ΔQ/Q) / (ΔP/P)
=(ΔQ/ΔP) / (P/Q)
=(dQ/dP)*(P/Q)
=-1
dQ/dP = d(173-5P)/dP = -5
Therefore
-5*(P/Q) = -1
-5P = -1(173-5P)
Solve for P to get P=17.3