Mr. Smith has the following demand equation for a certain product: Q = 30 - 2P.
a. At price of $7, what is point elasticity?
b. Between prices of 5$ and 6$, what is the arc elasticity?
c. If the market is mark up of 100 individuals with demand curve identical to Mr. Smith's, what will be the point and arc elasticity for the conditions specified in parts a and b?
1 answer
Q= 30-2(7)= 16 E p = -2(7/16)= -0.88 Raising the price by 1%, the quantity demanded goes down by 0.88%
1 answer