Question

What is the formula for calculating elasticity?

Solution

VerifiedStep 1

1 of 2The basic idea of elasticity is how a percentage change in one variable causes a percentage change in another variable.

$\text{Elasticity of variable 1 with respect to variable 2}=\dfrac{\text{\% change in variable 1}}{\text{\% change in variable 2}}$

Midpoint Method is used to calculate point elasticity between two points whether there is a variable increase or decrease. This formula uses the same base for both cases.

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