Consider the following demand function with a constant slope.
Let describe the quantity demanded of the product with respect to
price. In this instance will take the form where .
Note: The following is a graph of not .
(Click on graph to enlarge)
The price elasticity of demand as a function of price is given by the equation
.
Find and (your answers should be in terms of and ).
Which of the following graphs best matches the elasticity function for the above demand function?
(Click on a graph to enlarge it.)
(you will lose 25% of your points if you do)
You can earn partial credit on this problem.