The Demand equation for a product is given by Q=20I/P Where I is the income and P is the price. a) Write an equation for the point price elasticity. For what values of I and P is demand unitary elastic? explain b) Write an equation for the point price elasticity. For what values of I and P is the good is necessity? Explain
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Expert's answer
2020-06-08T11:13:25-0400
Q=20I/P
a) An equation for the point price elasticity is Ed = (∆Q/Q)/(∆P/P)
If I = 1/20 P, then the demand is unitary elastic.
b) An equation for the point price elasticity is Ed = (∆Q/Q)/(∆P/P)
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