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Question
Calculate the elasticity of demand for the demand schedule by using differential calculus method P = 60 − 0.2Q where the price is
- zero,
- ₹20,
- ₹40.
Solution
P = 60 – 0.2 Q
0.2 Q = 60 – P
(0.2 Q) 10 = (60 – p) 10
2 Q = 600 – 10p
Q = 300 – 5p
Given demand function Q = 300 – 5p
- If P = 0 then Q = 300 – 5 (0)
= 300
`"dp"/"dp"` = 300 - 5p
= 0 - 5
`"dp"/"dp"` = - 5
ed = `"p"/"p" "(dq)"/"(dp)"`
= `0/300` (-5)
ed = 0 - If p = 20 then Q = 300 = 5 (20)
= 200
ed = `20/200` (-5)
= - `100/200`
ed = - 0.5 - If = 40 then Q = 300 – 5 (40)
= 300 – 200
Q = 100
ed = `"p"/"q""(dq)"/"(dp)"`
ed = - `200/100`
ed = - 2
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