A Linear Demand for Lake Front Cabins on a Nearby

question 2

Multiple Choice

A linear demand for lake front cabins on a nearby lake is estimated to be: Q_D = 900,000 - 2P.What is the point price elasticity for lake front cabins at a price of P = $300,000? [HINT: E_p = (∂Q/∂P) (P/Q) ]

• A) E_P = -3.0
• B) E_P = -2.0
• C) E_P = -1.0
• D) E_P = -0.5
• E) E_P = 0

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