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The demand function for a product is modeled by p=20-0.02x, where p is the price (in dollars) and x is the number of units. (a) Determine when the demand is elastic, inelastic, and of unit elasticity. (b) Use the result of part (a) to describe the behavior of the revenue function.
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Step 1
1 of 6To find the elasticity of the demand, we use the formula
We find first by using the sum and difference rule. Thus,
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