Scenario 4.3: The Demand for Erasers (Q) Is Given as Follows

question 73

Multiple Choice

Scenario 4.3:
The demand for erasers (Q) is given as follows:
Q = 240 - 4Pe + 2I + Pb + A
where Pe is the price of erasers
I is the level of income
Pb is the price of another good
A is the level of advertising
Suppose that Q = 240, Pe = 10, Pb = 10, and A = 2.
-Given the information in Scenario 4.3, what is the point price elasticity of demand?

• A) -1/3
• B) -1/6
• C) -1/10
• D) -1/24
• E) -5/24