(a) Show that for a demand function of the form (p) =p, where c and n are positive constants, the elasticity is constant. (Hint: Determine D'(p) and substitute into the formula for E(p).) (b) What type of demand function has elasticity equal to 1 for every value of p?
(a) Show that for a demand function of the form (p) =p, where c and n are positive constants, the elasticity is constant. (Hint: Determine D'(p) and substitute into the formula for E(p).) (b) What type of demand function has elasticity equal to 1 for every value of p?
Chapter6: Elasticities
Section: Chapter Questions
Problem 5P
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