# Explain Any 'Two Methods' of Measuring Price Elasticity of Demand. - Economics

Explain any 'two methods' of measuring price elasticity of demand.

#### Solution

The following are the two methods of measuring price elasticity of demand:

1) Ratio Method

Ratio method is used to estimate elasticity at any point on a straight line demand curve. Elasticity is measured as the ratio of percentage change in quantity demanded to the percentage change in price i.e

e_d = "Percentage change in demand for a good"/"Percentage change in the price of a good"

2) Geometric Method

A geometric method is also called point method of measuring elasticity. Under this method, elasticity is measured at different points on a demand curve. This method of measuring price elasticity was developed by Dr Marshall. The price elasticity on any point of the demand curve is calculated by using the following formula.

"Price Elasticity of Demand" = "Lower segment of the demand curve below the given point"/"Upper segment of demand curve above the given point"

Accordingly, at the mid-point of straight line demand curve, the elasticity will be equal to one. For points above the mid-point, the elasticity will be greater than one. On the contrary, for points below the mid-point, the elasticity will be less than one.

Is there an error in this question or solution?