Question

The consumer demand equation for tissues is given by q = (110 − p)2, where p is the price per case of tissues and q is the demand in weekly sales. (a) Determine the price elasticity of demand E when the price is set at $27. (Round your answer to three decimal places.)

Answer 1

The answer is below

Step-by-step explanation:

Price elasticity of demand it the ratio of percentage change in quantity to percentage change in price. If the Price of elasticity demand is > 1, it is elastic, if it is = 1 it is unit and if it is < 1 it is inelastic. It is expressed mathematically as:

Price Elasticity of Demand (e) = % Change in Quantity Demanded / % Change in Price

`e=(dQ)/(dP)*(P)/(Q)\\ \\Q=(110 - P)2= 220-2P\\\\(dQ)/(dP) =-2\\\\P=\$27\\\\Q=(110-P)2=(110-27)2=166\\\\e=(dQ)/(dP)*(P)/(Q)=-2*(27)/(166) =-0.325`