Consider a market with the following demand and supply curves:Demand: Qd = 522 - 5PSupply: Qs = P + 46What is the price elasticity of demand at the market equilibrium? [Pay attention to the sign and round your answer to 2 decimal places.]
Question
Consider a market with the following demand and supply curves:Demand: Qd = 522 - 5PSupply: Qs = P + 46What is the price elasticity of demand at the market equilibrium? [Pay attention to the sign and round your answer to 2 decimal places.]
Solution
First, we need to find the equilibrium price and quantity. We do this by setting the quantity demanded equal to the quantity supplied:
522 - 5P = P + 46
Solving for P, we get:
5P + P = 522 - 46 6P = 476 P = 476 / 6 P = 79.33
Substituting P = 79.33 into the demand equation, we get the equilibrium quantity:
Q = 522 - 5*79.33 Q = 522 - 396.65 Q = 125.35
The price elasticity of demand is calculated as follows:
Ed = (dQ/dP) * (P/Q)
The derivative of the demand function with respect to P (dQ/dP) is -5 (from the demand equation Qd = 522 - 5P).
So,
Ed = -5 * (79.33 / 125.35) Ed = -3.17
So, the price elasticity of demand at the market equilibrium is -3.17.
Similar Questions
Market demand is given as Qd = 75 – P. Market supply is given as Qs = 3P + 15. If price increases from $5 to $7, what is the price elasticity of demand? Question 5Select one: a. 0.1 b. 0.3 c. 1.1 d. 2.3 e. None of the above.
Consider a market with a demand curve of P = 134–q and a supply curve of P = 3q. What is the price elasticity of demand at the market equilibrium?
Consider a market with a demand curve of P 198-q and a supply curve of P=4q.What is the price elasticity of supply at the market equilibrium?
1. In a particular market, demand and supply curves are defined by the following equations: P=100– 0.5QD QS= -200 + 2P where, P is the price in pounds, QS is the quantity supplied and QD¬ is the quantity demanded. (a) What is the equilibrium price and quantity? [5 marks] (b) What is the price elasticity of supply at a price of £35? [5 marks]
YouIf demand is given by q=5P ^-2 where q is quantity demanded and P is price, what isthe price elasticity of demandA) -0.5B) -5C) -2.5D) -2E) -0.4
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.