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Question
Find out the indicated elasticity for the following function:
p = xex, x > 0; ηs
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Solution
Given p = xex
Differentiating with respect to 'x' we get,
`"dp"/"dx" = x*e^x + e^x(1) = e^x (x + 1)`
`"dx"/"dp" = 1/(e^x(x + 1))`
Elasticity of demand
`eta_"d" = "p"/x * "dx"/"dp"`
`therefore eta_"d" = cancel(x e^x)/(cancel x) (1/(cancel(e^x) (x + 1)))`
`= 1/(x + 1)`
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