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Math Help - price elasticity of demand

  1. #1
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    Question price elasticity of demand

    the demand for a product is f(p)=a-bp, where f(p) is quantity demanded per day and p is the price per unit sold.

    a) calculate the point price elasticity: my response: please correct if is wrong: e=f'(p)(p/f(P))=-b/(a-bp/p)=-b/(a/p)-b

    b) this i can not figure it out: determine the value of p that will make price elasticity of demand equal 2.


    thank you
    helen
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  2. #2
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    Quote Originally Posted by helen View Post
    the demand for a product is f(p)=a-bp, where f(p) is quantity demanded per day and p is the price per unit sold.

    a) calculate the point price elasticity: my response: please correct if is wrong: e=f'(p)(p/f(P))=-b/(a-bp/p)=-b/(a/p)-b

    b) this i can not figure it out: determine the value of p that will make price elasticity of demand equal 2.


    thank you
    helen
    Your answer to (a) is correct. I assume for (b) the problem is that e = -b/(a/p)-b is negative and 2 is positive. Use the absolute value for the elasticity. See the second paragraph of the introduction here.
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