Question

If the demand curve for comic books is expressed as Q=50,000/p, then compute the price elasticity of demand.

Answer 1

we have $Q = \dfrac{50000}{p}$

As elasticity of demand $=\dfrac{dQ}{dP}*\dfrac{P}{Q}$

As $\dfrac{dQ}{dP} =\dfrac{d}{dP}(\dfrac{50000}{P})$

$=\dfrac{-50000}{P^2}$

$\therefore$ price elasticity is $=\dfrac{-50000}{P^2}* \dfrac{P}{Q}$

so the right answer is $=\dfrac{-50000}{PQ}$

AS PQ is given as 50000

$\therefore$ elasticity $==\dfrac{-50000}{50000} = -1$

hence the elasticity is unit unitary