CMA Foundation · Fundamentals of Business Mathematics and Statistics · Calculus - Application in Business
The demand function for a product is x = 50 − 2p, where x is the quantity demanded and p is the price in ₹. What is the numerical value of the point elasticity of demand at p = ₹10?
The elasticity is 2/3. At a price of ₹10 the quantity is 30, the slope dx/dp is −2, and the absolute value of the slope times p/x gives 2 × 10/30 = 2/3, so demand is inelastic at that price.
- A2/3Correct
- B3/2
- C1/3
- D2
Explanation
At p = 10, x = 50 − 20 = 30. dx/dp = −2. Elasticity = |dx/dp| × p/x = 2 × 10/30 = 2/3. Option 3/2 comes from inverting the ratio (x/p instead of p/x).
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