Question

The demand function is given by D(p)= 5,000-100p, where p is the price and If the price is 20 birrs, calculate price elasticity of demand

Answer 1

$$D=5000-100p$$

$$q=5000-100p$$

$$dq/dp=-100$$

$$p=20$$ $$q=5000-100/20$$

$$q=3000$$

$$\in=|dq/dp/p/q|$$ $$\in=|-100 / 20/3000|$$

$$\in=2/3$$

$$\in=0.666$$