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Math Help - Economics help required

  1. #1
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    Economics help required

    Consider two demand curves that have the same vertical intercepts (ie identical 'choke' prices). That is, their inverse demand functions can be written as p1 = a-bq1 and p2 = a - dq2. Fix an arbitrary price and compute the price elasticities at that price. Show that these price elasticities are the same.
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  2. #2
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    Quote Originally Posted by brumby_3 View Post
    Consider two demand curves that have the same vertical intercepts (ie identical 'choke' prices). That is, their inverse demand functions can be written as p1 = a-bq1 and p2 = a - dq2. Fix an arbitrary price and compute the price elasticities at that price. Show that these price elasticities are the same.
    Use this formula:
    E_d=\frac{P}{Q}*\frac{dQ}{dP}

    You will need to solve your demand equations for Q in terms of P first in order to find \frac{dQ}{dP}
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