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Constant-Elasticity Demand Function
Direct Demand Function: Quantity as a Function of Price (Q = D(P))
Example of a Constant-Elasticity Demand Function: Q = 5P^-1.4
A firm may face a demand function with constant price elasticity, such as . For this function, the price elasticity of demand remains constant at 1.4 at every price level. This formula is a specific instance of the general form for constant-elasticity demand, , where the elasticity is equivalent to the absolute value of the exponent 'b'. [1, 2]
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Example of a Constant-Elasticity Demand Function: Q = 5P^-1.4
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