Answer to Question #109135 in Microeconomics for m.saad farooq khan

Question

demand 100-2p ,supply =3p at the equilibrium ,calculate the price elasticities of demand and supply

Answer 1

With given supply and demand curve the equilibrium price and quantity are P=20. Q=60.

Point elasticity formula: 

$E = \frac{dQ}{dP}\times\frac{P}{Q}.$

So, $Ed = (-2)\times\frac{20}{60}=-\frac{2}{3}.$

$Es = 3\times\frac{20}{60}=1.$

The price elasticity of demand is -2/3, the price elasticity of supply is 1.