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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: QD = 900,000 - 2P.What is the point price elasticity for lake front cabins at a price of P = $300,000? [HINT: Ep = (∂Q/∂P) (P/Q) ]


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

Correct Answer:

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