Question #41038

Calculate point elasticity of demand for demand function Q=10-2p for
decrease in price from Rs 3 to Rs 2

Expert's answer

Ed = (deltaQ/Q0)/(deltaP/P0) = (deltaQ/deltaP)/(P0/Q0)

Where,

deltaQ = variation of the demand

deltaP = variation of the price

Q0 = quantity demanded at time t0

P0 = price at time t0

If Q = 10 - 2p, P0 = Rs 3, P1 = Rs 2, then Q0 = 10 - 2*3 = 4 units, Q1 = 10 - 2*2 = 6 units

Ed = ((6 - 4)/4)/((2 - 3)/3) = -0.5/(1/3) = -1.5, so the demand is elastic

Where,

deltaQ = variation of the demand

deltaP = variation of the price

Q0 = quantity demanded at time t0

P0 = price at time t0

If Q = 10 - 2p, P0 = Rs 3, P1 = Rs 2, then Q0 = 10 - 2*3 = 4 units, Q1 = 10 - 2*2 = 6 units

Ed = ((6 - 4)/4)/((2 - 3)/3) = -0.5/(1/3) = -1.5, so the demand is elastic

## Comments

## Leave a comment