
Laura M. answered 07/30/22
Tutor specializing in Economics and Mathematics
Hi Amanda,
Equation for Price Elasticity of Demand: E=-p/q*(dQ/dP)
dQ/dP=derivative of Q with respect to P
P=price
Q=quantity
Country 1: Q = 40 - 2P
P=10
Q = 40-2P = 40-2(10) = 40 - 20 = 20
dQ/dP = -2
E=-p/q*(dq/dp)
E=-10/20(-2) = -1/2(-2) = 1
Country 2: Q = 10 - 1/2P
P = 10
Q = 10-1/2(10) = 10 -5 = 5
dQ/dP = -1/2
E=-p/q*(dq/dp) =
E = 10/5*(-1/2) = 2(-1/2) = -1