proportionate method of calculating elasticity
Now we come to second method of calculating elasticity that is proportionate or percentage method .
Explanation in this method :we calculate change in quantity demanded of a commodity in response o the change in its price. This method was evolved by marshall ok.
Now let me explain the formula to be used it is –(q1-q0/p1-p0)*(p0/q0 ) where the q1 means changed quantity .
Q0 previous quantity
P1 is changed price
P0 is original price
Now can you see I have suffixed the formula with minus sign you know why it is because price and demand are inversely related to show this inverse relationship we suffix the formula with minus sign
So with this we complete our second method of calculating elasticity .
If you want to study the practical problems you can attend my second public class (free of cost) you want to join my private class you can mail me at priancakhatri@gmail.com for further details
Ok now we will study our third method of calculating elasticity
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this content provides easy understanding f second method of calculating elasticity
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