Find a positively sloped curve with a constant point elasticity everywhere on the curve. Write the equation of the curve and verify using formula ɛyx = (marginal function / average function) that the elasticity is a constant.
Find a positively sloped curve with a constant point elasticity everywhere on the curve. Write the equation of the curve and verify using formula ɛyx = (marginal function / average function) that the elasticity is a constant.
Chapter3: Preferences And Utility
Section: Chapter Questions
Problem 3.13P
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Transcribed Image Text:Find a positively sloped curve with a constant point elasticity everywhere on the curve. Write the
equation of the curve and verify using formula ɛyx = (marginal function / average function) that the
elasticity is a constant.
Expert Solution
Step 1
Elasticity is the change in some variable( say, quantity Q) for a percentage change in some other quantity( say, price P). So, elasticity is a unit-free number, it has no unit of measurement. It is a pure number. Elasticity can be positive, negative, constant, or infinity.
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