Market demand is given as QD = 300 - 3P.Market supply is given as QS = 2P + 100.If price increases from $25 to $30,what is the price elasticity of demand?

Question

Quizplus · Accepted Answer

The price elasticity of demand is calculated using the formula: (percentage change in quantity demanded) / (percentage change in price). At P = $25, QD = 300 - 3(25) = 225. At P = $30, QD = 300 - 3(30) = 210. The percentage change in quantity demanded is (210 - 225) / 225 = -0.0667. The percentage change in price is (30 - 25) / 25 = 0.2. Therefore, elasticity = -0.0667 / 0.2 = -0.3335, which is approximately 0.4 in absolute value.

Market Demand Is Given as QD = 300 - 3P