Answer to Question #105776 in Macroeconomics for Carrie Anne Swartz

Question

Marula Enterprises has developed a new local brew called Stiff Neck. The market demand for this product is given as follows: Q=240-4p. If Stiff Neck is priced at R40, what is the point elasticity of demand?

Answer 1

P=40 Q=80

$\Delta$Q/$\Delta$P=-4

e = -4*P/Q = -4*40/80 = -2