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10. Suppose the demand curve for a good is P = 200 - 5Q, where P is price and Q is quantity. Draw the demand curve. Calculate the point elasticity of demand and interpret the price elasticity of demand. Explain for which region of prices the demand will be a) Elastic [4 marks] b) Unit elastic [4 marks] c) Inelastic [2 marks]

Respuesta :

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a) Elastic: Price range: P < 40 (since elasticity > 1)

b) Unit elastic: Price range: 40 = P = 80 (since elasticity = 1)

c) Inelastic: Price range: P > 80 (since elasticity < 1)

Note: To calculate elasticity, you would use the formula:

Elasticity = (ΔQ / ΔP) × (P / Q)

Where ΔQ and ΔP are small changes in quantity and price, respectively.

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