Answer to Question #104297 in Microeconomics for sam

Question

Demand is given by P = 24 – 4Q, where P is the price of the good and Q is the quantity
demanded. At P = 12, the own price (point) elasticity is
a. 0.25
b. 0.5
c. 1
d. 2

Answer 1

Point elasticity is given by $\frac{\Delta{Q}}{\Delta{P}}\times{\frac{P}{Q}}$

$-4Q=P-24$

$Q=6-\frac{P}{4}$

$\frac{\Delta{Q}}{\Delta{P}}=-\frac{1}{4}$

$P=12$

$Q(12)=6-\frac{12}{4}=3$

$E=-\frac{1}{4}\times{\frac{12}{3}}=-1$

Thus, The correct answer is (c).