The demand curve for bananas is given by the equation p = 800−2q. At what point on the demand curve is the price elasticity of demand for bananas equal to −1? The answer is - (a) Where p = 400 and q = 200. Other options given are: (b) Where p = 480 and q = 160. (c) Everywhere along this line. (d) Where p = 160 and q = 320. (e) Where p = 240 and q = 280. How to do this?
p = 800 - 2q ; So Diff in p = -2 * Difference in q. Elasticity = (Diff in q /q )/(Diff in p/p) ; -1 = (1/-2) *( p/q) So p/q = 2. Solving these two equations give you the required answer
