Explain the Geometric Method of Measurement of Elasticity

Explain the Geometric Method of Measurement of Elasticity.




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 : Recession - Phases of business cycle

    Describe about the term Boom in phases of business cycle.

  • Q : Price of output in purely competitive

    When this purely competitive labor market is primarily in equilibrium at D0L, S0L, a moving step to equilibrium at D1L, S0L would be probably to follow from increases in: (w) imports of this good by foreign competitors. (x)

  • Q : Human Capital and the Demand for Labor

    Investment in human capital is not essentially involved while: (w) people acquire and sharpen new productive skills. (x) a person attends college and learns engineering. (y) a person jogs to stay in shape. (z) the marginal productivity of labor increa

  • Q : Most wage elastic demand for labor For

    For labor Plastibristle’s demand is most wage elastic at: (1) point a. (2) point b. (3) point c. (4) point d.

    Q : Demands of consumers adjusting to new

    CD sales have fallen from 2000, although sales of DVDs have increased, suggesting such that: (w) supply of prerecorded music should have fallen. (x) law of demand does not apply to the music market. (y) demands of many consumers adjusted to new technology. (z) music i

  • Q : Income and Substitution Effects When

    When the income effect of a higher wage rate is extremely powerful in that case the substitution effect, the: (1) supply curve of labor will be positively sloped. (2) demand for leisure increases like income rises. (3) human capital effect is stronger

  • Q : Factors governing prices and pricing

    Illustrates the factors governing prices and pricing decision in briefly?

  • Q : Attain new equilibrium in purely

    When this purely competitive labor market is primarily in equilibrium at D0L, S0L and after that excessive job safety standards are imposed through law, a new equilibrium will be attained at: (1) D0L, S0L. (

  • Q : Problem on Occupational Crowding After

    After vacationing hundreds of restaurants, then a restaurant critic has concluded which in almost all the workers who clear tables and also wash dishes appear to be illegal aliens by Mexico. The critic has observed a phenomenon termed as: (1) marginalized labor. (2) t

  • Q : Total supply of human capital in the

    Government policy is probably to help raise the total supply of human capital within the long run through: (w) increased public education and retraining programs. (x) minimum wage legislation. (y) laws prohibiting discrimination in employment. (z) str