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Consider the demand curve D(p) = 10 − 3p. What is the elasticity at price 5 3 ? - Economics

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Question

Consider the demand curve D(p) = 10 − 3p. What is the elasticity at price `5/3` ? 

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Solution

D(p) = 10 − 3p 

`(Delta D(p))/(Delta p) = -3 `⇒ Change in demand per unit change in price

`e_d = (DeltaQ)/(Deltap) xx p/Q`

`Þ - 3 xx p/(10-3p) Þ (-3p)/(10-3p)`

At price p `= 5/3`,

`e_d = (-3 xx 5/3)/(10-3 (5/3))`

`e_d Þ (-5)/5 = -1`

i.e., the elasticity of demand at price p =`5/3` is unitary elastic.

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