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Make a demand curve and Try some sample calculations for yourself. You will see, For example, that a change of 1 is a bigger percentage when the price is 10 than it is when the price is 100.
demand elasticity: midpoint method Drag point A to change the starting price and quantity; drag point B to change the magnitudes of the price and quantity changes. This diagram shows the effect of a price increase of Δ P = + 10 \\color{#2ca02c}\\Delta P = +10 Δ P = + 1 0 , from P A = 35 P_A = 35 P A = 3 5 to P B = 45 P_B = 45 P B = 4 5 .
To calculate elasticity, instead of using simple percentage changes in quantity and price, economists sometimes use the average percent change in both quantity and price. This is called the Midpoint Method for Elasticity:
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The Midpoint Rule is a numerical method used to approximate the value of a definite integral. It provides a way to estimate the area under a curve, which is particularly useful when the integral cannot be calculated directly. Why use midpoints? The idea is to improve the approximation’s accuracy.
Calculate the price elasticity of demand using the data in Figure 2 for an increase in price from G to H. Does the elasticity increase or decrease as we move up the demand curve? Step 1.
