Question

Sally is selling delicious cupcakes. As a result of paying attention to changes in cupcake demand...

Sally is selling delicious cupcakes. As a result of paying attention to changes in cupcake demand for price changes to identify demand for cupcakes. she found that cupcake sales fluctuate from 30 to 24 if the unit price of cupcakes changes from 4 to 5. Now, derive the linear demand curve of the cupcake, and obtain the price level of the cupcake whose price elasticity of demand is -1.

Homework Answers

Answer #1

Linear demand curve: X = 54 - 6P

​​​​​​Price level where elasticity equals -1 is 4.5

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