Business & economics · University
Point price elasticity of linear demand · formula reference
This uses the signed elasticity convention; the absolute magnitude is sometimes reported instead.
Formula
This uses the signed elasticity convention; the absolute magnitude is sometimes reported instead.
ε = (dQ/dP)(P/Q)
Worked example
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
Prerequisites and checking
Algebra and the topic definitions. Keep units and rounding consistent. State the model conditions before applying the formula.
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