Scenario 5.1
The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P x . Assume that P = $8, I = 200, and P x = $10.
-The point elasticity is a measure of the sensitivity of consumers to a large price change - a range from one price to another.

Question

Quizplus · Accepted Answer

Point elasticity measures the sensitivity of consumers to infinitesimally small price changes, not large price changes. It is calculated at a specific point on the demand curve, unlike arc elasticity which measures sensitivity over a range of prices.

Scenario 5.1 The Demand for Noodles Is Given by the Following Equation