The demand for space heaters is Q=250-P+2COOL, where COOL is the absolute value of the difference...

Question:

The demand for space heaters is Q=250-P+2COOL, where COOL is the absolute value of the difference between the average overnight low temperature and 40F. Assume that the average overnight low this month is 40F. When the price of space heaters is P=\$50, the price elasticity of demand is what?

The elasticity of demand:

The elasticity of demand is the ratio of the percentage change in quantity demanded to the percentage change in the price of a product. As the price rises then quantity demanded falls and as the price falls then the quantity demanded rises. It shows that the demand curve is downward sloping and it has a negative slope.

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{eq}\begin{array}{l} {E_d} = \frac{P}{Q} \times \frac{{\partial Q}}{{\partial P}}\\ As\,we\,know\\ Q = 250 - P + 2(COOL)\\ Q = 250 - 50 +... Price Elasticity of Demand: Definition, Formula & Example

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Chapter 3 / Lesson 54
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Price elasticity of demand describes the response of consumers to changing prices of goods and services. Review the formula for price elasticity of demand, learn how certain products can be deemed elastic or inelastic depending on consumer sensitivity, and understand the importance of the concept.