Let the demand function be Q(d) = 200 – 6P(X).
What is the own price elasticity of demand when P = 10?
What is the own price elasticity of demand when P = 20?
What is the own price elasticity of demand when P = 30?
Price elasticity of demand = (P/Q) / (dP/dQ) = (P/Q) (dQ/dP)
P = (200-Q)/6
dP/dQ = -1/6
dQ/dP = -6
a) P = 10
Q = 200 - 6x10 = 140
Price elasticity of demand = (P/Q) (dQ/dP) = (10/140) x -6
Price elasticity of demand = -3/7
b)
P = 20
Q = 200 - 6x20 = 80
Price elasticity of demand = (P/Q) (dQ/dP) = (20/80) x -6
Price elasticity of demand = -1.5
c)
P = 30
Q = 200 - 6x30 = 20
Price elasticity of demand = (P/Q) (dQ/dP) = (30/20) x -6
Price elasticity of demand = -9
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