Ed via de Midpoint-methode

Consider two points on a demand curve: point A and point B.

At point A, the price is 6 dollars, and the quantity demanded is 120 units.

At point B, the price rises to 9 dollars, and the quantity demanded decreases to 80 units.

From point A to point B, the price increases by 50 percent, and the quantity demanded decreases by 33.33 percent. This gives a price elasticity of 33.33 over 50."

However, from point B to point A, the price decreases by 33.33 percent, and the quantity demanded increases by 50 percent. This gives a price elasticity of 50 over 33.33."

This discrepancy arises due to the different bases used in each direction. It can be avoided by calculating price elasticity using the midpoint method.

Here, the changes in quantity demanded and price are divided by their respective mid-points.

In the example, the midpoint price is 7.5 dollars, and the midpoint of the quantity demanded is 100 units.

From the midpoint method, the price changes by 40 percent, and the quantity demanded changes by the same percentage, resulting in a price elasticity equal to 1.