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4.8: Technical tricks with elasticities

  • Page ID
    108382
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    We can easily compute elasticities at any point on a demand curve, rather than over a range or arc, by using the explicit formula for the demand curve. To see this note that we can rewrite Equation 4.1 as:

    img100.png

    The first term in the final form of this expression img101.png is obtained from the slope of the demand curve, and the second term (P/Q) is defined by the point on the curve that interests us. For example if our demand curve is img102.png, then img103.png. Inverting this to get img104.png yields –1 also. So, the point elasticity value at img105.png is img106.png. This formula provides the elasticity value at a particular point on the demand curve, rather than over a range of values or an arc. Consequently it is called the point elasticity of demand. And obviously we could apply it to a demand curve that is not linear provided we know the mathematical form and are able to establish the slope.


    This page titled 4.8: Technical tricks with elasticities is shared under a CC BY-NC-SA 4.0 license and was authored, remixed, and/or curated by Douglas Curtis and Ian Irvine (Lyryx) via source content that was edited to the style and standards of the LibreTexts platform.