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,Point elasticity is the price elasticity of demand at a specific point on the demand curve instead of
over a range of it. In economics, elasticity measures the percentage change of one economic variable
in response to a percentage change in another. point elasticity is thus the property where a change
in the price of a good or service will impact the product's demand. To get point PED we need to re-
write the basic formula to include an expression to represent the percentage, which is the change in
a value divided by the original value, as follows:
We can then invert the denominator, to get:
From the question:
∆𝑞 1
= −
∆𝑝 3.5
And when 𝑝 = 18; 𝑤𝑒 𝑔𝑒𝑡 18 = 60 − 3.5𝑞,
which gives 𝑞 = 12, 𝑏𝑦 𝑚𝑎𝑡ℎ𝑒𝑚𝑎𝑡𝑖𝑐𝑎𝑙 𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑜𝑛
PASSMATE TUTORIALS 0717 513 144/ 068 053 8213/ 062 262 1185
, 1 18
point elasticity = − 3.5 × 12 = −0.43
From the question:
∆𝑞
= −2.5
∆𝑝
And when 𝑝 = 20; 𝑤𝑒 𝑔𝑒𝑡 𝑄 = 80 − 2.5𝑃,
which gives 𝑞 = 30, 𝑏𝑦 𝑚𝑎𝑡ℎ𝑒𝑚𝑎𝑡𝑖𝑐𝑎𝑙 𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑜𝑛
20
point elasticity = −2.5 × 30 = −1,7 𝑤ℎ𝑜𝑠𝑒 𝑚𝑎𝑔𝑛𝑖𝑡𝑢𝑑𝑒 |−1,7| = 1,7 > 1, 𝑎𝑛𝑑 𝑑𝑒𝑚𝑎𝑛𝑑 𝑖𝑠 𝑒𝑙𝑎𝑠𝑡𝑖𝑐
NB: please take note demand is elastic if elasticity is greater than 1, and inelastic when less than
one, and unitary when elasticity ois exactly equal to one, save for perfectly elastic when
elasticity is infinity and perfectly inelastic when elasticity is zero.
PASSMATE TUTORIALS 0717 513 144/ 068 053 8213/ 062 262 1185
