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Francesco Paucek

Feb 20, 2025

Suppose the demand for artichokes (Qa) given as Qa=120-P. a) What is the price elasticity of demand?

b) suppose that the price of Qa is increased from $10, what will happen to the number of Qas sold and the total expenditure by consumers on Qas? c) At what price if any is the demand for Qas infinitely elastic?
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a) price elasticity of demand = dQ/dP * P/QdQ/dP = -1So, price elasticity of demand = -1 * P/Q = -P/QThe actual value of this expression will be different at each price, which is what we would expect since we know that elasticity varies along a demand curve.b) When P = 10, Qa = 120 - 10 = 110So, price elasticity of demand = -10/110 = -1/11This number (in absolute value) is less than 1, so at this point, we would say that demand is relatively inelastic. This means that consumers are not very responsive to price. Therefore, increasing the price would result in the total expenditure by consumers on artichokes increasing.c) To find the point, if any where demand is infinitely elastic, we want to find a price where -P/Q = infinity. A fraction approaches infinity as the denominator approaches zero. So at what price is Qa = 0? 0 = 120 - PP = 120... Show More
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