Thursday

March 5, 2015

March 5, 2015

Posted by **Dave** on Thursday, August 31, 2006 at 10:56pm.

You can see this chapter, and the question, by going to google and typing in "consider a linear demand curve, Q" (with the quotations), then choosing the last result (the PDF).

That is a .pdf version of the chapter. I am working on question 2.9, part C (this is the second to last page of the .pdf)

The question says "Consider a linear demand curve, Q = 350 - 7P. What is the price elasticity of demand at P = 50?

Using an equation in that chapter, (-b)(P/Q), I end up with the equation:

-7 ( 50 / (350 - 7(50)) )

But the problem is that 350 - 7(50) is 0! That means that the division can't be done, because the denominator is 0! So does this mean that the price elasticity of demand at P = 50 does not exist? How is this possible?

Thanks in advance! Dave

It's been some time since I had micro-econ, so I'm quite reluctant to speak like an expert on the subject. The math involved doesn't look exceptionally difficult, but I don't recall what the terms and symbols stand for.

I can comment on your observation/question, "...the denominator is 0! So does this mean that the price elasticity of demand at P = 50 does not exist? How is this possible? " though.

If you're calculations are correct, then the change in x is 0. This means you have a vertical asymptote at that point. I'm unsure how that should be interpreted though. You might want to study how the curve behaves in a very small neighborhood of the point P=50 to see how the curve is behaving there.

Does that help?

The short answer: the POINT elasticity at P=50 is infinite.

- microeconomics -
**:)**, Wednesday, June 29, 2011 at 7:54amwe also have the same problem...

**Answer this Question**

**Related Questions**

Health - Say there was a girl who is about 195 lbs. and about 5'7". She only has...

Microeconomics - This is due Monday. I am not sure I am doing it correctly. Can ...

English - Can you please check these sentences for me? Thank you. I'm unsure ...

Comm. Arts - Toulmin Model and Campus Gun Control? I'm getting really confused ...

Organziation :) - I asked the adivsor (a.k.a. 7th grad science teacher but not ...

English - Thesis Statement on Life of Pi - a) how is life of pi a story within a...

English - Choose 1/ ashraf(willbe, is) 20 next week. Answer: will be 2/ i (will ...

Microeconomics - You plan to go skiing next weekend. If you do, you’ll have to ...

Grammar - Choose the sentence that uses pronouns correctly. Who would you choose...

Biostatistics - Test the potency of a drug on 20 rats. Previous animal show that...