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professor190 [17]
3 years ago
6

The demand function for a product is defined as Q = 24 – 2 P. If price is equal to 4, then the price elasticity of demand is A.

elastic. B. unit elastic. C. inelastic. D. There is not enough information to determine the answer.
Business
1 answer:
leva [86]3 years ago
5 0

Answer:

option (c) inelastic

Explanation:

Given:

Q = 24 – 2 P

at P = 4

Q = 24 - 2(4)

= 16

Now,

Elasticity = \frac{\textup{dQ}}{\textup{dP}}\times\frac{\textup{P}}{\textup{Q}}

on substituting the respective values, we get

Elasticity = \frac{\textup{d(24 – 2 P)}}{\textup{dP}}\times\frac{\textup{4}}{\textup{16}}

or

Elasticity = -2 × 0.25

or

Elasticity = - 0.5

Since,

Elasticity is less than 1, therefore, the demand is inelastic.

Hence,

option (c) inelastic

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