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Recall That a Linear Demand Curve Has the Form Q

Question 62

Essay

Recall that a linear demand curve has the form Q = A - BP,where P is price and A and B are positive numbers.Suppose that when price is $5 the amount demanded is 100 and the elasticity of demand is -2.What are the values of A and B?

Correct Answer:

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E = -B × (P/Q),so -2 = -B × (5...

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