Question

Suppose the demand for the ibm personal computer is :
Qd=2400-4p.
A) At what price is the price elasticity of demand equal to zero ?
B) when the price elasticty of demand equal to 1, what is the quantity being demand at that point.

Answer 1

A) It is given the equation of the demand, which is $Q_d=2400-4p.$ It is required to calculate the price 'p' if this demand equation is equals to zero. Therefore,

$2400-4p=0\\4p=2400\\p=60$

B) It is given that the price 'p' is equals to 1, and required to find $Q_d.$ Therefore,

$Q_d=2400-4(1)\\Q_d=2396$

Answer 2

Answer:

a) P=0

b) Q=1200

Explanation:

A) Differentiating the demand equation, dQ/dP= -4

E=(dQ/dP).(P/Q) => 0=-4.P/Q => P=0

B) E=1 => 1= - 4P/Q   Since price or demand cannot be zero, we wil have to take mod

1 = 4P/Q  => 4P=Q

Put this into the demand eq

Q=2400-4P

Q=2400-Q

2Q=2400

Q=1200