Answer to Question #329228 in Microeconomics for Sam

Question #329228

A firm demand curve is P =1-2Q. The firm has a current price of R1000 and it sells 100 units per day. What is the firms price elasticity of demand?

Expert's answer

P = 1 - 2Q, so Q = 0.5 - 0.5P.

The firms price elasticity of demand is:

"Ed = -0.5\u00d71000\/100 = -5."

So, the demand is elastic at this price.

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