Compute the market quantity demanded

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Reference no: EM131008017

Consider the following market demand: QD = a – bP, where a, b > 0. At price P = 0.5(a/b), what is the absolute value of the price elasticity of this market demand? (NOTE: Write your answer in number format with two decimal places of precision. HINTS: First compute the expression for the price elasticity of this market demand. Next, compute the market quantity demanded at P = 0.5(a/b). Finally, substitute your P and QD values into your expression of the price elasticity of this market demand, to determine the absolute value of the price elasticity at that point.) Show all work.

Reference no: EM131008017

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