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ECONOMICS question about ARC vs. POINT.

G

GoldenGuppy

Diamond Member
Regarding PRICE ELASTICITY OF DEMAND what is arc vs. point? What does it mean? Thanks in advance...

Also can anybody recall the formula for price elasticity of supply?

Thanks
 
I probably could have told you two or three years ago, but I think all the formulas trickled out of my head when they handed me my degree. 😛
 
Elasticity over an arc would be the elasticity over a segment of a curve. I.E., (q2-q1)/(p2-p1).

Elasticity of a point is the elasticity of that exact point- dq/dp.

If you are looking at a linear function they are the same thing, but if you are looking at a non-linear demand curve (say a parabola) they will not be.

EDIT- clarification after I checked my micro textbook:
arc elasticity of demand = (p/q)*(delta(q)/delta(p))
point elasticity = (p/q)*(dq/dp) = d(ln Q)/d(ln P).
 
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