Business Calculus Question

Question

Given the demand equation, P= 8700/q^2

find the point elasticity when q=20

Answer 1

q = (8700/p)^1/2; E(p) = - pf'(p)/f(p);

f'(p) = 1/2(8700/p)^-1/2(- 8700/p²)

Now E(p) = - p·1/2(8700/p)^-1/2(- 8700/p²)/(8700/p)^1/2 = 1/2.

Here p = 8700/202 = $21.75

But elasticity = 1/2 and independent of price