Explain percentage and proportionate methods of calculating elastic demand
Answers
Answered by
6
according to percentage and proportionate method elasticity of demand is measured by the percentage change in demand due to change in price. 1. Percentage Method:
It is the most common method for measuring price elasticity of demand (Ed). This method was introduced by Prof. Marshall. This method is also known as ‘Flux Method’ or ‘Proportionate Method’ or ‘Mathematical Method’.
According to this method, elasticity is measured as the ratio of percentage change in the quantity demanded to percentage change in the price.
Elasticity of Demand (Ed) = Percentage change in Quantity demanded / Percentage change in Price
The percentage method can also be converted into the proportionate method. Putting the values of 1, 2, 3 and 4 in the formula of percentage method, we get:
Attachments:
Similar questions