Answer to Question #172299 in Microeconomics for Diogo Ruas

Question

Consider a demand function for a good given by X = 40-3P, asking if it determines the price corresponding to the unit elasticity.

Answer 1

$$40-3p=0$$

$$p=\frac{40}{3}$$

An elastic variable (with an absolute value of elasticity greater than 1) is one that responds proportionally more than to changes in other variables. In contrast, an inelastic variable (with an absolute elasticity value less than 1) is a variable that changes less than proportionally in response to changes in other variables. A variable can have different values ​​of its elasticity at different starting points: for example, the number of goods supplied by manufacturers can be elastic at low prices, but inelastic at higher prices, so that an increase from an initially low price can cause a more than proportional increase in the quantity supplied. while an increase from an initially high price may cause a less than proportional increase in supply.