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23 May, 16:02

Suppose the demand equation is: Upper Q equals 80 minus 0.25 p. What is the price elasticity of demand if the price is $40 per unit and output is 70 units? The price elasticity of demand is nothing. (Enter a numeric response using a real number rounded to two decimal places.)

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  1. 23 May, 16:51
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    The price elasticity of demand is - 0.25

    Explanation:

    The demand equation is given by:

    Q = 80 - 0.25p

    The price elasticity of demand is the same as the rate of change of Q (Quantity demanded) with respect to p (price).

    The rate of change of Q with respect to p is obtained by differentiating Q with respect to p

    Q = 8 - 0.25p

    dQ/dp = - 0.25

    Therefore, price elasticity of demand = - 0.25
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