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25 August, 22:00

If the inverse demand function is:

p = 50 - 0.5Q,

a. What is the price elasticity of demand and revenue at Q = 88?

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Answers (1)
  1. 26 August, 00:26
    0
    -0.136 and $528

    Explanation:

    Given that

    p = 50 - 0.5Q

    where,

    Q = 88

    So, p equals to

    = 50 - 0.5 * 88

    = 50 - 44

    = $6

    As it is mentioned that

    p = 50 - 0.5Q

    0.5Q = 50 - p

    Q = 100 - 2p

    And we know that

    Price elasticity of demand is

    = Percentage Change in quantity demanded : Percentage Change in price

    So,

    = - 2 * (6 : 88)

    = - 0.136

    And, the revenue is

    = Price * Quantity

    = $6 * 88

    = $528
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