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MATH SOLVE
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Suppose that the demand equation for a certain item is 1p+1x2β160=0. evaluate the elasticity at 65:
4 months ago
Q:
Suppose that the demand equation for a certain item is 1p+1x2β160=0. evaluate the elasticity at 65:
Accepted Solution
A:
Price elasticity is defined as [tex]\frac{\Delta(quantity)}{\Delta(price)}[/tex].
Here, the question has omitted to define variables, so we will ASSUME
p=price
x=variable,
and we're given
p+x^2-160=0
We calculate
[tex]\delta{x}/\delta{p}[/tex] by implicit differentiation with respect to p:
1+2x (dx/dp)=0
=>
E(x)=(dx/dp)=-1/(2x)
Therefore the price elasticity at x=65 is
E(65)=1/(2*65) =-1/130 (approximately -0.00769)