Answer to Question #277340 in Microeconomics for Tasneem Hassan

Question

Mary's demand curve for food is Q =10

Her price elasticity of demand for food at price p* equals - 2/3 how much is p*

Note

a Marginal Cost (MC) is the derivative of the total cost (TC) with respect to quantity Q. TC = 300, + 5Q +10Q2 Then MC= 5 + 20Q

Answer 1

Solution:

Price elasticity of demand = % change in quantity demanded /% change in price

PED = $\frac{\triangle Q}{\triangle P} \times \frac{\triangle Q}{\triangle P}$

$\frac{\triangle Q}{\triangle P}$ = -0.25

Q = 10

$-\frac{2}{3} =-0.25\times \frac{P}{10}$

P = 26.67

Price p* equals = 26.67