Answer to Question #3740 in Microeconomics for krithika
for quantity and P stands for price.
<br>a. Calculate point elasticities at prices of 5 and 9. Is the demand curve elastic or inelastic at these points?
<br>b. Calculate arc elasticity at the interval between P = 5 and P = 6.
Ed=δQ/δP * P/Q , where δQ/δP= -2
Point elasticity at the price P1: Ed1 = -2 * 5/10= -1. Unitarily elastic demand.
Point elasticity at the price P2: Ed2 = -2 * 9/2= -9. The demand curve is elastic.
Arc elasticity (Ed).
Ed=δQ/δP * (P1+P2)/(Q1+Q2 )
Ed1= -2/1 * 11/18= -11/9=-1.22
The demand curve is elastic.
Need a fast expert's response?Submit order
and get a quick answer at the best price
for any assignment or question with DETAILED EXPLANATIONS!
It's given that&
<span style="font-family: Arial, sans-serif; font-size: 14px; line-height: 24px; text-align: justify; text-indent: 27px; background-color: rgb(250, 250, 250); ">q= 20 – 2P</span><div><span style="font-family: Arial, sans-serif; font-size: 14px; line-height: 24px; text-align: justify; text-indent: 27px; background-color: rgb(250, 250, 250); ">So we can find derivative dq/dp=d(20-2p)/dp=-2</span></div>
How do you the Q/P = -2 in the point elasticity equation?
You are welcome. We're pleased to help you