Suppose that the demand function for good Y is given as a li

Suppose that the demand function for good Y is given as a linear function: Qd(P)=120-2P. where P is the price of good Y. Find the price at which price elasticity of demand for Y is -1.

Solution

Price elasticity of demand = Qd/p

-1 = 120-2p/p

-p = 120-2p

-120 = -2p + p

-120 = - p

P = $120