The demand function for a cola-type soft drink in general is q= 20 - 2P, where Q stand for quantity and P stands for price.
a. Calculate point elasticities at prices of 5 and 9. Is the demand curve elastic or inelastic at these points?
b. Calculate arc elasticity at the interval between P = 5 and P = 6.
c. At which price would a change in price and quantity result in approximately no change in the total revenue? Why?
d)Also, if the equation for a demand curve has been estimated to be Q = 100 - 10P + 0.5Y where Q is quantity, P is price, and Y is income. Assume that P = 7 and Y = 50.
e) Interpret the equation.
f) At a price of 7, what is the price elasticity?
g) At an income level of 50. What is income elasticity?
h) Now assume that income is 70. What is the price elasticity at P = 8?