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vredina [299]
3 years ago
11

The demand for textbooks is Q = 200 – P + 25 U – 50 P beer. Assume that the unemployment rate U is 8 and the price of beer P bee

r is $2. When the average price of a textbook is P = $100, the price elasticity of demand is:
Business
1 answer:
Readme [11.4K]3 years ago
4 0

Answer: -0.5

Explanation:

Based on the information given, the price elasticity of demand will be calculated as follows:

= dQ/dP × P/Q

where,

dQ/dP = -1

P = 100

Q = 200 – P + 25 U – 50 P beer

Q = 200 - 100 + 25(8) - 50(2)

Q = 200 - 100 + 200 - 100

Q = 200

Therefore, dQ/dP × P/Q

= -1 × (100/200)

= -1 × 1/2

= -1 × 0.5

= -0.5

The price elasticity of demand is -0.5.

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