Elasticity of Demand help

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rockoutloud

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If someone could help with this problem I'd be thrilled thanks!

For the demand equation compute the elasticity of demand and determine whether the demand is elastic, unitary, or inelastic at the indicated price

X= (-7/6)*p+80 p=12

I am just having trouble setting the problem up I know how to determine whether its elastic or not. thanks again!
 
rockoutloud said:
If someone could help with this problem I'd be thrilled thanks!

For the demand equation compute the elasticity of demand and determine whether the demand is elastic, unitary, or inelastic at the indicated price

X= (-7/6)*p+80 p=12

I am just having trouble setting the problem up I know how to determine whether its elastic or not. thanks again!
Click to expand...

Since you are stuck at the very begining (no work shown) - let's start with the definitions.

Can you please provide us with the definitions of the terms - and their mathematical representations or equations - in the question?
 
rockoutloud said:
I'm unsure what you mean. You want the definition of Elasticity of Demand?
Click to expand...

Yes along with the definitions of elastic, unitary demand and inelastic demand.

I would like for you to tell me also how those definitions are represented mathematically.
 
Elasticity of demand is the change in the quantity size over the size of the quantity.

the demand is elastic if greater than 1
unitary if it equals 1
and inelastic if less than 1

p represents the price
and x would represent the quantity but no quantity is given in the problem
 
If someone could help with this problem I'd be thrilled thanks!

For the demand equation compute the elasticity of demand and determine whether the demand is elastic, unitary, or inelastic at the indicated price

X= (-7/6)*p+80 p=12

I am just having trouble setting the problem up I know how to determine whether its elastic or not. thanks again!
Click to expand...
X' = -7/6, slope = |X'| = 7/6
when p=12, X=(-7/6)*12+80=66
elasticity = (12/66)7/6 = 0.21
 
Now you have calculated the "elasticity" - and you know the mathematical relationships that determine whether the demand is elastic, unitary, or inelastic knowing the elasticity.

So continue to...

determine whether the demand is elastic, unitary, or inelastic at the indicated price.
 
JohnZ said:
X' = -7/6, slope = |X'| = 7/6
when p=12, X=(-7/6)*12+80=66
elasticity = (12/66)7/6 = 0.21
Click to expand...
I would like to point out an error with your elasticity equation, highlighted in red above. Elasticity is defined as the percentage change in quantity over the percentage change in price, which can be written as
\(\displaystyle \frac{\textrm{%} \Delta Q}{\textrm{%} \Delta P}\)
​
and this equals
ΔQQΔPP=ΔQΔP⋅PQ\displaystyle \frac{\frac{\Delta Q}{Q}}{\frac{\Delta P}{P}}=\frac{\Delta Q}{\Delta P}\cdot\frac{P}{Q}.
​
Now, ΔQΔP\displaystyle \frac{\Delta Q}{\Delta P} is the inverse of the gradient, so the substitution should be 67⋅1266=0.156\displaystyle \frac{6}{7}\cdot\frac{12}{66}=0.156
This value indicates an inelastic price elasticity of demand.
 
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