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Aditi posted an Question
August 27, 2020 • 22:22 pm 5 points
  • UGC NET
  • Economics

For a demand function p =16-q-0.5q the price elasticity of demand at q=4 is: (1) +0.5 (2) +0.2 (3)+0.7 (4) +0.3...please explain.

For a Demand Function p =16-q-0.5q the price elasticity of demand at q=4 is: (1) +0.5 (2) +0.2 (3)+0.7 (4) +0.3

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  • Payel banerjee best-answer

    dd function is p=16-q-0.5q^2. If q=4 then the value of p=4(putting the value of q into the dd equation ).We know that the formula of price elastity of dd(ep)= - dq/dp x p/q. then from the dd function we get dp/dq= -1-q = - (q+1). So dq/dp= - 1/(q+1). now ep= - [ -1/(q+1) x p/q ]= 1/(4+1) x 4/4 [ p=4; q=4] = 1/5 x 1 = 1/5 = +0.2 . So ep= +0.2 (option 2 correct )

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