i want to know the logic behind the price elasticity of demand formula:
(q1 - q2)/(q1+q2)*(p1+p2)/(p1-p2)
1 Replies
Deep@k $ingh@l
(CA>FINAL May'14)
(595 Points)
Replied 05 December 2009
It is a formula for Arc elasticity.
It is because of the question arise which price and quantity should be taken as base. So the average of both are taken. Both the sums are divided by two and thus both 2's are cancelled. Ok
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