1,116
edits
Changes
Jump to navigation
Jump to search
Line 1:
Line 1: − '''Arc elasticity of demand''' calculates the elasticity by using the average overall values for [[price]] and [[quantities]] as the respective denominator in calculating the elasticities.+ − − There is an ambiguity in calculating the percentage change in price or quantity in calculating elasticity of demand. What should be used as the denominator in deriving the percentages? If $100 increases to $110, then the percent change could be described as $10/$100 x 100% or $10/$110 x 100%. Above we used the initial price and quantity as the denominator, but we could have used the final price and quantity as the denominator instead. − − Economists resolve this by typically using the “arc elasticity” because it is a more accurate depiction of the “arc” or curve of demand. − − [[Category:Economics]]
Arc elasticity of demand (view source)
Revision as of 14:27, September 13, 2011
, 14:27, September 13, 2011no edit summary
▄▄█▀▀ █▬█ █ ▀█▀