Question

For the inverse demand curve
P=60-0.5q, find the elasticity of demand at P=10

Answer 1

$P = 60 - 0.5Q$ , $Q = 120 - 2P$,$P = 10$ ,

Q = 120 - 2*10 = 100.

elasticity of demand, Ed = a*P/Q,

Ed = -2*10/100 = -0.2,

Hence, demand is inelastic.