Find the elasticity of the demand function:
pq = 42 p=$2
My professor went through this lesson really fast and I would appreciate anyone's help in explaining it.
Thank You
To find the elasticity of the demand function, we need to first understand what elasticity is. Elasticity measures the responsiveness of the quantity demanded to a change in price.
In this case, we have the demand function pq = 42, where "p" represents the price and "q" represents the quantity demanded.
To find the elasticity, we will use the formula:
E = (Δq / q) / (Δp / p)
Where Δq represents the change in quantity demanded, Δp represents the change in price, and E represents the elasticity.
However, since we are only given a single point, we need to make an assumption about the change in price and quantity demanded.
Let's assume that the price decreases from $2 to $1. We can now calculate the corresponding quantity demanded using the demand function:
(2)q = 42
q = 21
Now let's substitute the given values into the elasticity formula:
E = ((21-1)/21) / ((2-1)/2)
E = (20 / 21) / (1 / 2)
E = (20 / 21) * 2
E = 40 / 21
Hence, the price elasticity of the demand function is 40/21.