Given the following demand equation Q 1005p Calculate the p

Given the following demand equation: Q = 100-5p Calculate the price that corresponds with a price elasticity value of 0.75 P(enter your response rounded to two decimal places).

Solution

Q= 100 - 5 p

Take the first derivative of Q with respect to P, we get ,

Change in Q/ change in P = -5

Now , price elasticity of demand =( change in Q/change in P )(P/Q)

= -5 (P /100-5 P)

And elasticity is given = -0.75

Therefore, -5P /100-5P = -0.75

-5P = (-0.75)(100-5P)

-5P = -75 + 3.75P

P = 8.57.