Your company charges 60 for a board game it invented and has

Your company charges $60 for a board game it invented and has sold 3,000 copies during the last year. Elasticity for board games is known to equal 3. Use this information to determine a linear and power demand curve.

Solution

Elasticity Demand = (dQ/dP) * P/Q

substitute the value or P and Q

3 = (dQ/dP) * 60/3,000

dQ/dP = 3,000*3/60

= 150

demand function P = a - bQ

P = 60

Q = 3,000

b or dQ/dP = 150

substitute

60 = a - 150(3,000)

a = 450060

Inverse Demand function (P) = 450,060 - 150Q