An oil-producing country estimates that the demand for oil (in millions of barrels per day) is D(p) = 9.5e-0.01p, where p is the price of a barrel of oil. (a) Determine the elasticity of demand function, E(p), for the oil.

An oil-producing country estimates that the demand for oil (in millions of barrels per day) is D(p) = 9.5e-0.01p, where p is the price of a barrel of oil. (a) Determine the elasticity of demand function, E(p), for the oil.

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter5: Elasticity Of Demand And Supply

Section: Chapter Questions

Problem 1.1P: (Calculating Price Elasticity of Demand) Suppose that 50 units of a good are demanded at a price of...

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Question

An oil-producing country estimates that the demand for oil (in millions of barrels per
day) is D(p) = 9.5e-0.01p, where p is the price of a barrel of oil.
(a) Determine the elasticity of demand function, E(p), for the oil.
(b) Complete the table below and then identify the price per barrel, p, that
maximizes revenue.
Price per barrel, p
Elasticity, E(p)
80
90
100
110
120

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