Question

the demand for skateboard rides is given:

Qd = 3Pd^-.5

find the own-price elasticity of demand for skateboard ride is price is $37

Answer 1

The demand for skateboard rides is given by,

Qd = 3.Pd^{​​​-0.5}

Taking logerithm on both sides of the above equation we get,

ln(Qd) = ln(3) - 0.5×ln(Pd)

Now, taking differential on both sides we get,

(dQd/Qd) = -0.5.(dPd/Pd)

or, (dQd/dPd).(Pd/Qd) = -0.5

or, Ed = -0.5

Hence, the own price elasticity is constant for every price level and it is equal to (-0.5).

The own price elasticity of demand for skateboard rides at price $37 is (-0.5).

Hope the solution is clear to you my friend.