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Nilanjan Bhowmick AIR 3, CSIR NET (Earth Science)
- UGC NET
- Economics
Find the price elasticity of demand at x= 2?
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Nidhi taparia![best-answer]()
The reason why this question is slightly different from our usual examples on calculating price elasticity of demand, is because it is an inverse demand function. In an inverse demand function, Price (P) is shown as a function of Quantity (x). Unlike the ordinary demand function where X is a function of P. Usually whenever demand function is in inverse form, we change it to the ordinary form by transforming it to Quantity (x) as a function of Price (P). But in the example given above, we cannot do that because it is an implicit quadratic function and hence the transformation is extremely mathematical. So let's leave that and stick to solving for elasticity in its present form. The elasticity comes out to be 0.5 in this case. Please refer to the attached images for seeing the calculation. We have calculated the reciprocal of the usual elasticity formula and then reciprocalled the answer to arrive at the price elasticity of demand.