Can you differentiate between elasticity of demand and point elasticity of demand?

Hi Tejal, When calculating elasticity of demand there are two possible ways. Point elasticity of demand takes the elasticity of demand at a particular point on a curve (or between two points)Arc elasticity measures elasticity at the mid point between the two selected points: Formula for point elasticity of demand is: PED= % ? Q / Q —- % ? P / P To get more precision, you can use calculus and measure an infinitesimal change in Q and Price ( where ð = very small change) This is the slope of the demand curve at that particular point in time. point elasticity Arc Elasticity Arc elasticity measures the mid point between the two selected points: arc elasticity Example of Difference between Point and Arc Elasticity A to B Demand_curve-wiki Point elasticity A to B Quantity increase from 200 to 300 = 100/200 = 50% Price falls from 4 to 3 = 1/4 = -25% Therefore PED = 50/ -25 = – 2.0 Mid Point Elasticity A to B Mid point of Q = (200+300) / 2 = 250 Mid Point of P = (3+4) / 2 = 3.5 Q % = (100/250) = 40% P % = 1/3.5 = 28.57 PED = 40/-28.57 = – 1.4 (or ( 3.5/250) * 100/1 = – 1.4)

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