If P₁ = $5, Q₁ = 10,000, P₂ = $6 and Q₂ = 5,000, then at point P₁ an estimate of the point price elasticity e_P equals:

Name: If P 1 = $5, Q 1 = 10,000, P 2 = $6 and Q 2 = 5,000, then at point P 1 an estimate of the point price elasticity e P equals:
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Question

Quizplus · Accepted Answer

The point price elasticity of demand is calculated using the formula: e_P = (ΔQ/ΔP) * (P₁/Q₁). Here, ΔQ = 5,000 - 10,000 = -5,000 and ΔP = 6 - 5 = 1. So, e_P = (-5,000/1) * (5/10,000) = -2.5.

If P1 = $5, Q1 = 10,000, P2 = $6

If P₁ = $5, Q₁ = 10,000, P₂ = $6