Question #104297

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

demanded. At P = 12, the own price (point) elasticity is

a. 0.25

b. 0.5

c. 1

d. 2

Expert's answer

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).

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