P=120-2q find a) MC and elasticity of demand when q=10 – InterviewSolution

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1.

P=120-2q find a) MC and elasticity of demand when q=10

Answer»

<P>Explanation:

Given dd FUN : p = 120 - 2q

Marginal cost (MC) : INCREASE in Total cost resulting from the PRODUCTION of one extra unit of output.

MC =dp/dq

= - 2

Elasticity = (dq/q) / (dp/p)

= p / (q* MC)

Now

when q = 10,

p = 120 - 20 = 100

Elasticity = 100 / ((10* (-2))

= - 5

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