A quantitative finance problem by Steven Yuan
Quantitative Finance
Level
2
Suppose that, in a perfectly competitive market, the quantity \( Q \) that is demanded of a certain product as a function of the price \( P \) is \( Q = a - bP \), for some constants \( a \) and \( b \). What is the absolute value of the elasticity of demand at the quantity that maximizes revenue?
by
Steven Yuan