Question: Suppose the demand for a certain commodity is given by q = b ap, where a and b are positive constants, and 0

Suppose the demand for a certain commodity is given by q = b − ap, where a and b are positive constants, and 0 ≤ p ≤ b/a.

a. Express elasticity of demand as a function of p.

b. Show that the demand is of unit elasticity at the midpoint p = b/2a of the interval 0 ≤ p ≤ b/a.

c. For what values of p is the demand elastic? Inelastic?

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