Answer to Question #167126 in Economics of Enterprise for Anuradha

Question

We are given the demand function P =100-5x at Price P=20 Find of elasticity demand?

Answer 1

$P=100-5x$

$20=100-5x$

$5x=80$

$x=16$

again, $5x=-P+100$

$x=\frac{-P}{5}+\frac{100}{5}$

$E_d=\frac{dx}{dP}\times \frac{P}{x}=\frac{-1}{5}\times \frac{20}{16}=-0.25$