Question

7.1 Unanswered The demand for x is given by x= 500 — 2px + 5py + 0.11. Calculate the (own) price elasticity of demand when Px = 100, x = 800. Enter a number only, round to two decimal places. Enter a NEGATIVE sign IF needed. We will talk about absolute values, but when calculating will keep the negative sign. Type your response

Answer 1

7.1) -0.25
Own price elasticity of demand = (dx/dpx)*(px/x)
dx/dpx = -2
So, Own price elasticity of demand = (-2)*(100/800) = -0.25

7.2) -2
Own price elasticity of demand = (dx/dpx)*(px/x)
dx/dpx = -2(0.7p^-2-1) = -1.4p^-3
So, Own price elasticity of demand = (-1.4p^-3)*(p/0.7p^-2​​​​​​​) = -2p^-3+1+2 = -2p⁰ = -2

7.3) 0.75
Own price elasticity of demand = Percentage change in demand of x/Percentage change in price of y = -9.75/(-13) = 0.75

7.4) D Need more information to answer the question.
(We need to know the percentage change in quantity.)