The elasticity of demand if p = 40 - 2q at a price of p = 8 is?
(a) -0.35;
(b) -0.5;
(c) 0.25;
(d) 0.5.
you need to know the price elasticity of demand equation ( they will give it to you in test anyway)
its
now since that formula is in terms of p , you want to rearrange it to be in terms of q.
So using the given price of 8 you can work what q is. Then work out the derivative of p and q in relation to each other. So derivative of q is 2 and derivative of p is 1.
Since elasticity is less than one , changes in price change quantity less than 1 for 1 , so it is inelastic.
Does that help?