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
Question
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
Solution
The price elasticity of demand is calculated using the formula:
Elasticity = (dq/dP)*(P/q)
Given the demand function q = 5P^-2, we can first find dq/dP, which is the derivative of the demand function with respect to P.
The derivative of q with respect to P is dq/dP = -10P^-3.
Substituting dq/dP and the demand function into the elasticity formula gives:
Elasticity = (-10P^-3)*P/(5P^-2) = -2P^-1 = -2/P.
Therefore, the price elasticity of demand is not constant but depends on the price P. None of the options A) -0.5, B) -5, C) -2.5, D) -2, E) -0.4 are correct as the elasticity is not a constant value but a function of price.
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.
The demand function is given by P= 2400 - 0.5Q. What is the quantity at which the demand is unit-elastic?
Price Elasticity Of Demand
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.]
for the demand function q=D(p)=319-p, find the following a) the elasticityb) the elasticity at p=118, stating whether the demand is elastic or inelastic or has unit elasticityc) the value(s) of p which total revenue is a maximum (assume that p is in dollars
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.