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Calculate the point price elasticity of demand

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Reference no: EM132173531

PM = $20000  PG = $1.00     I = $15000     A = $10000

This function is:

QT = 200 -.01PT +.005P­M -10PG +.01I +.003A

Assume the PT = $35000 (which should make QT = 120). Now, using the point elasticity formula below, calculate the point price elasticity of demand. Is this point elasticity coefficient the same as the arc coefficient in #1 (-2.92)? Why does this make sense if the two are the same? If the two differ, does this make sense and why? The formula is: (dQt/dPt)(Pt/Qt)

Reference no: EM132173531

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