Question

In: Economics

Suppose the demand equation for bicycles is P = 1900 – 20QD. Calculate the elasticity of...

Suppose the demand equation for bicycles is P = 1900 – 20QD. Calculate the elasticity of demand between the quantity demanded of 40 and 50

Solutions

Expert Solution

P = 1900 - 20QD

When, QD = 40, P = 1900 - 20(40) = $1,100

When, QD = 50, P = 1900 - 20(50) = $900

So, P1 = 1,100          Q1 = 40

      P2 = 900              Q2 = 50

Price elasticity of demand = (Q2 - Q1) / (P2 - P1) * (P1 + P2) / (Q1 + Q2)

                                          = (50 - 40) / (900 - 1,100) * (1,100 + 900) / (40 + 50)

                                          = (10 / -200) * (2,000 / 90)

                                          = 20,000 / -18,000

                                          = -1.11

The absolute value of Price elasticity of demand is 1.11.


Related Solutions

The​ price-demand equation for a particular product is f(p)=850−3p2. The elasticity of demand of this product...
The​ price-demand equation for a particular product is f(p)=850−3p2. The elasticity of demand of this product at a price of ​$13 is?
The demand function for a certain item is Q=p^5e^(−(p+7)) Remember elasticity is given by the equation...
The demand function for a certain item is Q=p^5e^(−(p+7)) Remember elasticity is given by the equation E=−(dQ)/(dp)(p/Q). Find E as a function of p. E=
A person's demand is given by the following equation: log(Q)=40-10log(P). What is the elasticity of demand...
A person's demand is given by the following equation: log(Q)=40-10log(P). What is the elasticity of demand when P=100?
Qd : 50-p Qs :-10+p Calculate the price elasticity of demand at the equilibrium price? Also,...
Qd : 50-p Qs :-10+p Calculate the price elasticity of demand at the equilibrium price? Also, calculate the price elasticity of supply at the equilibrium price? Explain your result for both.
Use the following information to calculate the price elasticity of demand for school fees: If P=30;...
Use the following information to calculate the price elasticity of demand for school fees: If P=30; Q^d =6000 If P=50; Q^d =4000 The elasticity is 0.5 The elasticity is 0.8 The elasticity is 1.8 The elasticity is 1.2 Which one of the following is a normative statement? Price rise when the government increase the quantity of money When more people find jobs, unemployment rates drop The government should invest more money in research When the price of a good increase,...
Using Calculus, calculate the elasticity of the following demand functions. After that, calculate the elasticity for...
Using Calculus, calculate the elasticity of the following demand functions. After that, calculate the elasticity for the points (1, 3) and (2, 2). The first coordinate of the points above is Q, the second is Price. (1) Q = 10P ^ (-4) (2) Q = 10 - P
if the demand curve is Q(p)=p*, what is the elasticity of demand? if marginal cost is...
if the demand curve is Q(p)=p*, what is the elasticity of demand? if marginal cost is 1$ and *= -2, what is the profit maximizing price?
Suppose the income elasticity of demand for food is 0.5 and the price elasticity of demand...
Suppose the income elasticity of demand for food is 0.5 and the price elasticity of demand is -1.0. Suppose a hypothetical group of people spend $10,000 a year on food, the price of food is $2, and that their total income is $25,000. a. If a sales tax on food caused the price of food to increase to $2.50, what would happen to their consumption of food? b. Suppose they will get a tax rebate of $2500 to ease the...
Suppose the demand for tickets to a Titans' football game is given by the equation P...
Suppose the demand for tickets to a Titans' football game is given by the equation P = 200 - .002Qd. Total player costs are $40m, and the remaining costs of operating the franchise are $10m. All of the costs are fixed (let MC=0), and stadium capacity is 55,000. What is the profit maximizing price and quantity for Titans tickets? Depict your solution in a diagram. Be thorough and precise. Suppose the Titans signed better players. What would happen to ticket...
Suppose the domestic demand for coffee is given by the equation Q = 100 - P,...
Suppose the domestic demand for coffee is given by the equation Q = 100 - P, domestic supply by the equation Q = P. The world price for coffee is $20 per unit. The government decides to impose an import quota limiting imports to 10 units. How much deadweight loss will this generate? Please explain clearly using graphs.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT