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Unformatted text preview: axis. Demand is completely inelastic at the intercept on the quantity axis. Demand is unit elastic at the half-way point between these two extremes. Thus, a. The price elasticity of demand equals zero (is completely inelastic) at a price of zero. b. Demand is infinitely elastic at a price of $60. c. The price elasticity of demand equals one at a price of $30. d. The price elasticity of demand equals P Q Q P ∆ ∆ . If P equals $40, Q equals 80. Q P ∆ ∆ is constant along a linear demand curve. In this case it equals -4. Therefore, the price elasticity of demand equals (40/80)(-4) = -2....
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This note was uploaded on 04/29/2008 for the course ECON 302 taught by Professor Toossi during the Spring '08 term at University of Illinois at Urbana–Champaign.
- Spring '08
- Price Elasticity