Consider the demand curve D(p) = 10 – 3p. What is the elasticity at

1.	Consider the demand curve D(p) = 10 – 3p. What is the elasticity at price 5/3?
Answer» D(p) = 10 – 3p b = ΔQ/ΔP = 3 p = 5/3 or D (5/3)= 10 - 3x5/3 Q = 10-5 =5 e_d = ΔQ/ΔP x P/Q = -3 x (5/3)/5 e_d= -1 i.e., the elasticity of demand at price p = 5/3 is unitary elastic.

Consider the demand curve D(p) = 10 – 3p. What is the elasticity at price 5/3?

Answer»

D(p) = 10 – 3p
b = ΔQ/ΔP = 3
p = 5/3 or D (5/3)= 10 - 3x5/3
Q = 10-5 =5

e_d = ΔQ/ΔP x P/Q

= -3 x (5/3)/5
e_d= -1
i.e., the elasticity of demand at price p = 5/3 is unitary elastic.

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Consider the demand curve D(p) = 10 – 3p. What is the elasticity at price 5/3?

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