Explain the Geometric Method of Measurement of Elasticity
Explain the Geometric Method of Measurement of Elasticity.
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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.
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
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For wage rates in between $18 and $21, there the elasticity of Morgan’s supply of labor is: (w) 0.72. (x) one. (y) 1.08. (z) 1.44. Discover Q & A Leading Solution Library Avail More Than 1423743 Solved problems, classrooms assignments, textbook's solutions, for quick Downloads No hassle, Instant Access Start Discovering 18,76,764 1924043 Asked 3,689 Active Tutors 1423743 Questions Answered Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!! Submit Assignment
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