(d) 20. (e) None of the above. 9, Rino, Giancarlo, and Jason are all buyers of c

Question

(d) 20. (e) None of the above. 9, Rino, Giancarlo, and Jason are all buyers of chain saws. Rino's demand function is Q-520- 13P, Giancarlo's demand function is Og-40-P, and Jason's is 200-5P. Together, these three constitute the entire demand for chain saws. At what price will the price elasticity of market demand be -1? (Hint: Remember the way we said market demand was calculated. Once you obtain it computing the elasticity should be straightforward) (5 points) (a) 19. (b) 20 (c) 25. (d) 15. (e) Too much information is provided. I am confused.

Explanation / Answer

market demand is given by the demand of all the consumers in the market

QM = Qr+Qg+Qj

so Qm = 760-19P

now elasticity is given by

DQ/DP*P/Q = -19*P/760-19P = -1

38P = 760 OR P = 20

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