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(a) PU = PA = $300

QdU = 10,000 - (100 x 300) + (99 x 300) = 10,000 - 300 =

9,700

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Price elasticity of demand (United) = (dQdU / dPU) x (PU / dQdU)
= - 100 x (300 /
9,700) = - 3.09

(b) Let PA = PU = P (= $300)

QdU = 10,000 - 100P + 99P = 10,000 - P

QdA = 10,000 - 100P + 99P = 10,000 - P

Market demand, Q = QdU + QdA = 10,000 - P + 10,000 - P

Q = 20,000 - 2P

When P = 300, Q = 20,000 - (2 x 300) = 20,000 - 600 = 19,400

Market price elasticity of demand = (dQ / dP) x (P / Q) = - 2 x

(300 / 19,400) = - 0.03

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