A. At a price of $7, what is the point elasticity?
B. Between prices of $5 and $6 what is the arc elasticity?
C. If the market is made up of 100 individuals with demand curves identical to Mrs. Smiths what will be the point and arc elasticity for the conditions specified in parts A and B?
This material may consist of step-by-step explanations on how to solve a problem or examples of proper writing, including the use of citations, references, bibliographies, and formatting. This material is made available for the sole purpose of studying and learning - misuse is strictly forbidden.A. At P = $7, Q = 30-2(7) = $16
A 1% change in price is %7.07 (up) or $$6.93 (down)
A 1% change in price results in a quantity of $15.86 or $16.14 (using Q=30-2P)
% Change in Q = (16.14-16)/16 = .0875; same thing if price decreases.
Point elasticity is then (% change in Q)/(% change in P) = .0875/.01 = .875...