Answer to Question #317513 in Microeconomics for moni

Question

Given the demand function Qx = 8000-1000Px, determine the elasticity of demand at a single point where price of Rs. 6 and the corresponding quantity of 2000 units

Answer 1

Qx = 8000-1000Px

Ped=$\frac {percentage change in Q}{percentage change in P}$

Ped=$\frac{dq}{dp}\times\frac{p}{q}$ ,where p=6,q=2000

$\frac{dq}{dp}$ 8000-1000Px=-1000 therefore

=-1000$\times$ $\frac{6}{2000}$

=$\frac{-6000}{2000}$ =-3

elasticity of demand is $\mid$-3$\mid$ ,hence

PEd=3