The demand function for a product is defined as Q = 24 - 2P. If price is equal to 8, then the price elasticity of demand is
A) elastic.
B) unit elastic.
C) inelastic.
D) There is not enough information to determine the answer.

Question

Quizplus · Accepted Answer

The price elasticity of demand (PED) is calculated as (dQ/dP) * (P/Q). Here, dQ/dP = -2, P = 8, and Q = 24 - 2*8 = 8. Thus, PED = (-2) * (8/8) = -2, which indicates that the demand is elastic.

The Demand Function for a Product Is Defined as Q