Demand function $x$ , for a certain commodity is given as $x = 200 - 4 p$ where $p$ is the unit price.
Find:
a. elasticity of demand as a function of $p$ .
b. elasticity of demand when $p = 10$ , interpret your result.

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Solution

a, $x = 200 - 4 p$
$η = \frac{\partial x}{\partial p} \times \frac{p_{0}}{x_{0}}$
$= - 4 \times \frac{p}{200 - 4 p}$
b, $η = - 4 \times \frac{10}{200 - 40} = \frac{- 40}{160} = \frac{1}{4}$
$η < 1$ , goods price inelastic.

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Demand function x, for a certain commodity is given as x=200−4p where p is the unit price.Find:a. elasticity of demand as a function of p.b. elasticity of demand when p=10, interpret your result.

a, x=200−4pη=∂x∂p×p0x0=−4×p200−4pb, η=−4×10200−40=−40160=14η<1, goods price inelastic.

Demand function $x$ , for a certain commodity is given as $x = 200 - 4 p$ where $p$ is the unit price.
Find:
a. elasticity of demand as a function of $p$ .
b. elasticity of demand when $p = 10$ , interpret your result.

a, $x = 200 - 4 p$
$η = \frac{\partial x}{\partial p} \times \frac{p_{0}}{x_{0}}$
$= - 4 \times \frac{p}{200 - 4 p}$
b, $η = - 4 \times \frac{10}{200 - 40} = \frac{- 40}{160} = \frac{1}{4}$
$η < 1$ , goods price inelastic.