Question

Write short note on 'Geometric method of measuring price elasticity of demand'.

Answer 1

i) Geometric method was suggested by Prof. Marshall and is used to measure the elasticity at a point on the demand curve.

ii)When there are infinitely small changes in price and demand, then the ‘Geometric Method’ is used. This method is also known as ‘Graphic Method’ or ‘Point Method’ or ‘Arc Method’.

iii)Elasticity of demand (E_d) is different at different points on the same straight line demand curve.

iv) In order to measure E_d at any particular point, lower portion of the curve from that point is divided by the upper portion of the curve from the same point: Elasticity of Demand (E_d) = Lower segment of demand curve (LS) / Upper segment of demand curve (US).