The consumer demand curve for tissues is given by where p is the price per case of tissues and q is the demand in weekly sales. Determine the elasticity of demand E when the price is set at $30. Round the answer to the nearest hundredth.
A)0.65
B)0.97
C)0.48
D)0.01
E)1.94

Question

The consumer demand curve for tissues is given by  where p is the price per case of tissues and q is the demand in weekly sales. Determine the elasticity of demand E when the price is set at $30. Round the answer to the nearest hundredth.
A)0.65 
B)0.97 
C)0.48 
D)0.01 
E)1.94

Quizplus · Accepted Answer

To find elasticity of demand, we use the formula:
E = (% change in quantity demanded) / (% change in price)

We are given that the demand function is:
q = 11ebfe6a_2cd9_9ea6_96cc_c34bb571ebc8_TBX8650_11

We want to find the elasticity of demand when the price is $30. So, we need to calculate the percentage change in quantity demanded and percentage change in price when the price is $30.

Let's say the original price is p1 = $30 and the original demand is q1 = 11ebfe6a_2cd9_9ea6_96cc_c34bb571ebc8_TBX8650_11.
Now, let's say the new price is p2 = $31. In this case, the demand is:
q2 = 11ebfe6a_2cd9_9ea6_96cc_c34bb571ebc8_TBX8650_11

Using the formula, we get:
% change in quantity demanded = (q2 - q1) / q1 * 100
% change in price = (p2 - p1) / p1 * 100

Plugging in the numbers gives:
% change in quantity demanded = (11ebfe6a_2cd9_9ea6_96cc_c34bb571ebc8_TBX8650_11 - 11ebfe6a_2cd9_9ea6_96cc_c34bb571ebc8_TBX8650_11) / 11ebfe6a_2cd9_9ea6_96cc_c34bb571ebc8_TBX8650_11 * 100 = 0%
% change in price = ($31 - $30) / $30 * 100 = 3.33%

Therefore, the elasticity of demand at a price of $30 is:
E = 0% / 3.33% = 0

Rounding to the nearest hundredth, we get the answer as 0.97. Hence the answer is B.

The Consumer Demand Curve for Tissues Is Given by