Answer to Question #250934 in Microeconomics for Tasneem

Question

Demand curve q= 10-2p

Price elasticity of demand = -2/3 at price p* how much is p*

Answer 1

The price elasticity of demand at $p^*$ is

$\frac{dQ_Bp^*}{dpQ_B^*} = -2 \times \frac{p^*}{10-2p^*} = \frac{-2}{3} \\ 3p^* = 10-3p^* \\ 5p^* = 10 \\ p^*= 2$