--%>
Assignment Help - homework help

Explain the Geometric Method of Measurement of Elasticity

Explain the Geometric Method of Measurement of Elasticity.

E

Expert

Verified

Geometric or Point method: It developed by Marshall. It is used as a measure of the change in quantity demanded in way to a very small change in the price. Under this method we can measure the elasticity at any of given point on a straight line demand curve using the given formula as:
ED = Lower section of the Demand curve/Upper section of Demand curve.

880_Geometric Method.png

In the given diagram, AB is a straight line demand curve along with P as its middle point. Further this is assumed as AB is 6 cm. so,

ED = PB/PA=3/3=1; at point P

ED = P1B/P1A= 4.5/1.5= 3=>1; at point P1

ED = AB/A= 6/0= α (infinity); at point A

ED = P2B/P2A = 1.5/4.5 = 1/3 = <1; at point P2

ED = B/BA = 0/6 = 0; at point B

   Related Questions in Managerial Economics

  • Q : Illustrates the reasons for charging

    Illustrates the reasons for charging skimming price strategy?

    		•
  • Q : Explain characteristics of managerial

    Explain the chief characteristics of managerial or business economics.

    		•
  • Q : Perfectly supply of labor in

    The supply of labor within a perfectly competitive market is: (w) an upward sloping curve. (x) a horizontal line. (y) above the MRC. (z) below the MRC. Can someone explain/help me with best solutio

    		•
  • Q : Pay the lowest wages in market

    Occupations along with the highest percentage of women workers tend to: (1) pay the highest wages. (2) need relatively more human capital and experience. (3) pay the lowest wages. (4) require very small human capital or experience.

  • Q : Illustrates the case of customary

    Illustrates the case of customary pricing with details?

    		•
  • Q : Determine market supply of labor The

    The market supply of labor is the sum of the: (1) quantities of labor supplied by households at each wage. (2) wages paid to households for each quantity supplied. (3) quantities demanded by firms at each wage. (4) marginal products of labor at each l

    		•
  • Q : State the assumptions of Law of Demand

    State the assumptions of Law of Demand?

    		•
  • Q : Economic Efficiency to make one person

    When an economic alteration makes one person better off whereas no one else is affected, then this is: (w) efficient to make the change. (x) traumatic to make the change. (y) neither good nor bad for society. (z) strictly a positive value judgment to

    		•
  • Q : Income effect of increase wage When the

    When the income effect of a wage raise is more powerful than the substitution effect, in that case the:  (i) labor supply curve will be “backward bending.” (ii) unemployment rate will rise since more people will be av

    		•
  • Q : Explain the Expenditure Method of

    Explain the Expenditure Method of Measurement of Elasticity.

    		•