+3 votes
in General by kratos

For the demand function D = 100 $"p"^2/2$. Find the elasticity of demand at p = 6 and comment on the results.

1 Answer

+2 votes
by kratos
 
Best answer

Given, demand function is D = 100 - $"p"^2/2$

$"dD"/"dp" = 0 - "2p"/2 = -"p"$

$eta = (-"p")/"D" * "dD"/"dp"$

$eta = (-"p")/(100 - "p"^2/2) * (- "p")$

$= "p"^2/((200 - "p"^2)/2)$

$eta = "2p"^2/(200 - "p"^2)$

When p = 6,

$eta = (2(6)^2)/(200 - (6)^2) = 72/164 = 18/41$

elasticity of demand at p = 6 is $18/41$

Here, > 0

The demand is inelastic.

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