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8 July, 19:04

The demand curve for a product is Q = 50 - 0.5P. What is the price elasticity of demand at a price of $60?

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  1. 8 July, 21:17
    0
    -1.5

    Explanation:

    Q = 50 - 0.5P

    The formula for elasticity of demand is

    E = - P/Q x dQ/dP

    To find dQ/dP you need to differentiate Q with respect to p.

    dQ/dP = - 0.5

    When P = 60

    Q = 50 - 0.5 (60)

    Q = 50 - 30

    Q = 20

    E = - P/Q x dQ/dP

    P = 60

    Q = 20

    dQ/dP = - 0.5

    E = - 60/20 x (-0.5)

    E = - 3 x (-0.5)

    E = - 1.5
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