Price Elasticity

Hello,

Could someone please let me know if this equation looks ok.

Find the price elasticity of demand when P=3 for each of the following demand functions

a) P = 12 - 0.2Q

3 = 12 - 0.2Q

0.2Q = 12 - 3

0.2Q = 9

Q = 9/0.2

Q = 45

b) Q = (100/P)^4

dQ/dP = -30000P^-5

elasticity =

-30000P^-5 x (P/(10000P^-4))

= -30000P^-5 x (P^4/10000)

= -1

Cheers

Reply 1

steve2005

This does not look right to me.

Reply 2

tv4me

ok. So is it dQ/dP = -4000P^-5?

Reply 3

steve2005

tv4me

ok. So is it dQ/dP = -4000P^-5?

No you have (100)^4 to start with.

Reply 4

steve2005

tv4me

ok. So is it dQ/dP = -4000P^-5?

No

I hope this is correct

Reply 5

tv4me

Thanks for your help. Do i just leave that as the answer or am i meant to work it out because i get a massive number?

Also, does question A look ok?

Thank you

Reply 6

steve2005

tv4me

Thanks for your help. Do i just leave that as the answer or am i meant to work it out because i get a massive number?

Also, does question A look ok?

Thank you

I spotted one error and hope I have corrected it. I am not an expert, there may be other things wrong with your solutions.

Reply 7

steve2005

tv4me

Thanks for your help. Do i just leave that as the answer or am i meant to work it out because i get a massive number?

Also, does question A look ok?

Thank you

No A is not correct.

The question says " Find the Price Elasticity of Demand" you have found Q only.

Reply 8

maths-enthusiast

On a slightly tangential note, does it bother anybody that it is assumed price and demand of whatever good/service is being discussed is assumed to be continuous and differentiable?

Reply 9

Overmars

no.

edit: Actually, I have no idea what you're on about.

Reply 10

Zhen Lin

maths-enthusiast

On a slightly tangential note, does it bother anybody that it is assumed price and demand of whatever good/service is being discussed is assumed to be continuous and differentiable?