# managerial economics

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4. The equation for a demand curve has been estimated to be Q = 100 – 10P + 0.5Y where Q is quantity, P is price, and Y is income. Assume that P = 7 and Y = 50.
a. Interpret the equation.
b. What is price elasticity at P = 7 and arc elasticity at the interval between P = 6 and P=7.
c. What is income elasticity at Y = 50 and arc elasticity at the interval between Y = 50 and P=60.
d. Now assume that income is RM70. What is the price elasticity at P = 8? Also, calculate arc elasticity at the interval between P=7 and P= 8.

• managerial economics -

A. Q=100-10*7 +0.5*50
Q= 100-70+25
Q= 55

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