Question

Given the demand function Q= 75 - 5 P find the price elasticity of demand at P = 3 and P = 5

Answer 1

Answer:

Demand function is Q = 75-5p

Formula:

Price of elasticity of demand (Ed) = Marginal function / Average function.

Solution:

when the given function is differentiated with respect to 'p', then,

Marginal function = = 0 - 5 = -5

Average function = Q / p

Therefore,

Ed =   /  Q / p

= -5p / Q

Ed = - 5p / 75-5p

At p = 3,

Ed = -5 * 3 / 75 - (5*3)  

   = -15/ 60

Ed = -0.25

At p = 5,

Ed = -5 * 5 / 75 - (5*5)  

   = -25/ 50

Ed    = -0.5

Explanation: