Q=50-2p let p=1birr ,is elastic or inelastic?
To determine whether the demand is elastic or inelastic, we need to calculate the price elasticity of demand (PED).
The formula for calculating PED is:
PED = (% change in quantity demanded) / (% change in price)
In this case, we're given the equation Q = 50 - 2p, and we're told that p = 1 birr. To calculate the price elasticity, we need to determine the percentage change in quantity demanded and the percentage change in price.
Let's assume the price increases from 1 birr to 2 birr. We can calculate the new quantity demanded by substituting the new price into the demand equation:
Q2 = 50 - 2(2) = 46
Now, we can calculate the percentage change in quantity demanded:
% change in quantity demanded = (Q2 - Q1) / Q1 * 100
= (46 - 50) / 50 * 100
= -8%
Next, we calculate the percentage change in price:
% change in price = (P2 - P1) / P1 * 100
= (2 - 1) / 1 * 100
= 100%
Now, we can find the price elasticity of demand (PED):
PED = % change in quantity demanded / % change in price
= (-8%) / (100%)
= -0.08
Since the price elasticity of demand (PED) is less than 1 (in absolute value), the demand is inelastic.