Assume the demand for organic salmon (OS) is given by the following equation where is the quantity and P is the price of Q: Demand: Q₁ = 100-1/P 1. The current price of OS is set at $60 per kg. Find the price elasticity of demand at this price. Is demand elastic or inelastic at this price? Explain. (2 marks) Hint: Use the point elasticity formula. 2. Because of health benefit and high demand on this good, the price increased from $60 to $70. Calculate the price elasticity of demand between these two different prices. Explain numerically the effect of this price change on total revenue.
