Business & economics · University
Point price elasticity of linear demand
This uses the signed elasticity convention; the absolute magnitude is sometimes reported instead.
Method and conditions
This uses the signed elasticity convention; the absolute magnitude is sometimes reported instead.
ε = (dQ/dP)(P/Q)
Worked examples
Demand is Q=144−10P. At P=7, calculate signed point price elasticity (dQ/dP)(P/Q). Round the final result to 4 decimal places if needed.
At that price Q=74, and dQ/dP=−10. Multiply −10 by 7/74.
-0.9459
Demand is Q=195−10P. At P=12, calculate signed point price elasticity (dQ/dP)(P/Q). Round the final result to 4 decimal places if needed.
At that price Q=75, and dQ/dP=−10. Multiply −10 by 12/75.
-1.6
Try it
Demand is Q=58−10P. At P=4, calculate signed point price elasticity (dQ/dP)(P/Q). Round the final result to 4 decimal places if needed.
Demand is Q=74−4P. At P=2, calculate signed point price elasticity (dQ/dP)(P/Q). Round the final result to 4 decimal places if needed.
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Answers and marking notes
- -2.2222
At that price Q=18, and dQ/dP=−10. Multiply −10 by 4/18.
- -0.1212
At that price Q=66, and dQ/dP=−4. Multiply −4 by 2/66.
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