Question

Find the price elasticity of demand for the demand function x = 10 – p where x is the demand p is the price. Examine whether the demand is elastic, inelastic, or unit elastic at p = 6.

Answer 1

The demand function is x = 10 – p 

Price elasticity of demand,

Price elasticity of demand when p – 6 is η_d = \(\frac{6}{10-6}\) = \(\frac{6}{4}\) = 1.5

∴ |η_d| = 1.5 > 1, the demand is elastic.