Calculate the elasticity of demand if the demand function is

Calculate the elasticity of demand, if the demand function is Q=160-2p + 24Y. at the point where p 10 and Q The elasticity of demand is 20 (Enter your response rounded to one decimal lace andma ea minus son Enter your answer in the answer box and then click Check Answer parts emaining Clear All

Solution

Demand function is as follows -

Q = 160 - 2p + 24Y

Calculate the first derivative of demand function -

dQ/dp = d(160 - 2p + 24Y)/dp = -2

p = 10

Q = 20

Calculate the elasticity of demand -

e = (dQ/dp) * (p/Q) = -2 * (10/20) = -2 * (1/2) = -1

The elasticity of demand is -1.