Question
The economic advisor of a large tire store proposes the demand function D(p)=
, where D(p) is the number of tires of one brand and size that can be sold in one day at a price p. For what prices is the demand elastic? Inelastic?
Solution
VerifiedStep 1
1 of 2
Elasticity is interpreted as the percentage change in the demand that results for every change in the price.
We have:
So, for every change in the price, demand drops for . Since the change , demand drops for .
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