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    Elasticities of demand and supply: Calculation Methods

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    How can we calculate the elasticities of demand from a demand function, and elasticities of supply from a supply function ?

    © BrainMass Inc. brainmass.com October 10, 2019, 6:45 am ad1c9bdddf

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    1. Given the following demand function, calculate the following:
    a. Price elasticity of demand
    b, Income elasticity of demand
    c. Advertising elasticity of demand

    Qx = -1000Px + 100Y + 0.08Pop -1,000,000i + 0.01A

    2. Given the following supply function, calculate the elasticity of supply.
    Qx = 4000Px -3700PT -50,000PL - 400,000i -1000T

    Solution to question 1:

    a) The formula for the price elasticity of demand is:

    ηd = ...

    Solution Summary

    In this solution, it is shown how elasticities of demand and supply are calculated. The elasticities shown in the calculation are: price elasticity of demand, income elasticity of demand and advertising elasticity of demand.