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Unformatted text preview: quantity demanded to changes in price this is an elastic demand. The Midpoint Method: a better way to calculate percentage changes and elasticities. Trying to calculate the price elasticity of demand between two points on a demand curve, the elasticity from point A B is different from point B A. • One way to eradicate this issue is to use the midpoint method . The standard procedure for calculating a percentage change is to divide the change by the initial level. Using the midpoint method, one divides the change by the average of the end/initial level. • Take for instance a change from $4 to $6, or $6 to $4. Either way it is a 40% rise or fall. So price elasticity of demand= [(Q 2Q 1 )/(Q 2 +Q 1 )÷2]/ [(P 2P 1 )/(P 2 +P 1 )÷2] This should be used whenever you calculate elasticity....
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This note was uploaded on 10/17/2011 for the course ECON 2023 taught by Professor Unknown during the Fall '05 term at Arkansas.
 Fall '05
 Unknown
 Microeconomics, Price Elasticity

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