Mathematical Method – Measures of Price elasticity of Demand

The point elasticity can also be calculated mathematically. We know that the slope of demand curve at any point is

Expressed by the differential, . But in case in case we take the reciprocal of the

Slope to get, and multiply it by the ratio of original price to original quantity

p/q, we get  , which is nothing else but the elasticity of demand

Illustration: If the demand function of a consumer is Q = 500 – 20

Found when p = 10

From Q = 500 – 20 p we find that at p =10. Q=500 –20 × 10 = 300

Further,   = – 10

The elasticity of demand = = –20 ×10/300 =-2/3

= – .67

6 thoughts on “Mathematical Method – Measures of Price elasticity of Demand”

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