If the demand function for orange juice is expressed as Q = 2000 - 500p, where Q is quantity in gallons and p is price per gallon measured in dollars, then the demand for orange juice has a unitary elasticity when price equals
A) $0.
B) $1.
C) $2.
D) $4.

The price elasticity of demand is is defined to be the percentage change in quantity demanded divided by the percentage change in price. The formula is:

Elasticity = [tex]\frac{P}{Q}\frac{dQ}{dP} = \frac{P}{2000-500P} \times (-500)[/tex]

Unitary elasticity (change in price leads to equal change in quantity demanded) means absolute value of elasticity = 1 => elasticity = -1

=> [tex]\frac{P}{2000-500P} = \frac{1}{500}[/tex]

=> 500P = 2000 - 500P

=> P = 2

If the demand function for orange juice is expressed as Q = 2000 - 500p, where Q is quantity in gallons and p is price per gallon measured in dollars, then the demand for orange juice has a unitary elasticity when price equals A) $0. B) $1. C) $2. D) $4.

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If the demand function for orange juice is expressed as Q = 2000 - 500p, where Q is quantity in gallons and p is price per gallon measured in dollars, then the demand for orange juice has a unitary elasticity when price equals
A) $0.
B) $1.
C) $2.
D) $4.