Suppose the demand equation is: Upper Q equals 120 minus 1.25 p. What is the price elasticity of demand if the price is $60 per unit and output is 45 units? The price elasticity of demand is nothing. (Enter a numeric response using a real number rounded to two decimal places.)

-1.67

Explanation:

Given that,

Q = 120 - 1.25p

Initial price, p = $60 per unit

Initial quantity, q = 45 units

Q = 120 - 1.25p

Now, differentiating Q with respect to price,

dQ/dp = - 1.25

Therefore,

Price elasticity of demand:

= (dQ/dp) * (p : q)

= - 1.25 * (60 : 45)

= - 1.25 * 1.33

= - 1.67

This means that the demand is elastic.