Question

How to use the price demand equation : x = f(p) = 60,000 - 700p to find E(p), the elasticity of demand?

Answer 1

See the following example :)

Explanation:

Inverse demand function: `P = a -b Qd`
Noted that,
`P` : Price
`a` : y-intercept
`b` : absolute value of slope
`Qd` : quantity demanded

Price Elasticity of Demand=
percentage change of quantity / percentage change of price

`=(% Delta x)/(% Delta Px) =((Delta x)/x)/((Delta Px)/(Px))=(Delta x)/(Delta Px)((Px)/x)=1/(slope of Inverse DemandCurve)((Px)/x)`
Noted that `x:`average quantity and `Px:` average price

You can try to follow the above explaination and plug in the given information of your question to find the answer. Hope this can help you. Feel free to ask me if you still don't understand :)