Suppose the demand function for a product is given by 5,000 – q In p = q + 1 where p is in hundreds of dollars and g is the number of tons. (a) What is the elasticity of demand when the quantity demanded is 9 tons and the price is $155? (Round your answer to c 39.9 (b) Is the demand elastic or inelastic? O inelastic

Suppose the demand function for a product is given by 5,000 – q In p = q + 1 where p is in hundreds of dollars and g is the number of tons. (a) What is the elasticity of demand when the quantity demanded is 9 tons and the price is $155? (Round your answer to c 39.9 (b) Is the demand elastic or inelastic? O inelastic

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter6: Elasticities

Section: Chapter Questions

Problem 5P

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(Calculating Price Elasticity of Demand) Suppose that 50 units of a good are demanded at a price of Si per unit. A reduction in price to $0.20 results in an increase in quantity demanded to 70 units. Using the midpoint formula, show that these data yield a price elasticity of 0.25. By what percentage would a 10 percent rise in the price reduce the quantity demanded, assuming price elasticity remains constant along the demand curve?
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