Question #58850

The point price elasticity of demand for red herring is -4. The demand curve for red herring is Q = 120-P.
What is the price of red herring?

Expert's answer

If the point price elasticity of demand for red herring is -4 and demand curve for red herring is Q = 120-P, then the formula for point price elasticity is Ed = Qd'*P/Q, so:

-4 = (-1)*P/Q,

P/Q = 4,

Q = P/4

If Qd = 120 - P, then:

120 - P = P/4,

1.25P = 120,

P = $96.+

So, the price of red herring is $96.

-4 = (-1)*P/Q,

P/Q = 4,

Q = P/4

If Qd = 120 - P, then:

120 - P = P/4,

1.25P = 120,

P = $96.+

So, the price of red herring is $96.

## Comments

## Leave a comment