Board 8 > Microeconomics question on elasticity.. anyone?

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So the equation for elasticity is E = %changeQuantity / %changePrice

How do you calculate the % change for each?

I learned 2 methods, the midpoint method and this other method which is (q2-q1)/q2 divided by (p1-p2)/p2

midpoint is (q2-q1/average of the two) divided by (p2-p1/average of the two)

So which one is used to calculate % change?

Alright thanks, that helps a lot. So I gotta use my first formula and not the mid-point method.

Also, how would you define unit elasticity?

Percentage change = (x2 - x1) / x1

That midpoint thing should produce different results. Ex: Gas goes from $4 to $10 (change of 150%), and demand drops 10%. So we have elasticity of 1/15. Using midpoint, the 10% drop becomes 10.53%, and the 150% gain becomes an 85.7% gain, for elasticity of about 8.14.

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