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## Point method

Point method:We can evaluate the price elasticity of demand at a point on linear demand curve. The formula to find out ep through point method is,

For illustration, in figure above, the length of the demand curve AB is 4 cm.

Accurately at the middle point of AB demand curve,

A)

e_{p}at point e:e

_{p}= EB/EA = 2/2 = 1 ∴ e_{p}= 1B)

= (middle point of EB part of demand curve)e_{p}at point De

_{p}= DB/DA = 1/3 = 0.3 ∴ e_{p}< 1C)

(middle point of EA part of demand curve)e_{p}at point ce

_{p}= CB/CA = 3/1 = 3 ∴ e_{p}> 1D)

= 0/AB = 0e_{p }at point B(i.e., o by anything is zero, a mathematical principle) ∴ e

_{p}= 0E)

= AB/0 = ∞e_{p}at point A(That is, anything divided by zero becomes infinity a mathematical principle)

∴ e

_{p}= ∞Latest technology based Economics Online Tutoring AssistanceTutors, at the

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