A manufacturer of infant clothes has found that the demand f
A manufacturer of infant clothes has found that the demand for its product is given by Q = 100P-1.25A0.5, where P is price and A is advertising expenditures. The price elasticity of demand for these infant clothes is? Show me the work
Solution
Q = 100P - 1.25A0.5
Price elasticity of demand = (dQ/dP) x (P/Q) = 100 x (P/Q)
The numerical value of price elasticity of demand can be computed if the value of either P & A, or Q & A is given.
Here, P, Q, A all values are missing.
