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    Just had an economics lesson with my mathematically inept teacher :p:

    We were discussing how price elasticity is calculated along a demand curve.

    Elasticity=\dfrac{\% \Delta D}{\% \Delta P}

    P=Price=y
    D=Consumption=x

    If we have a demand function (lets just keep it linear)

    P=aD+b

    Which is just like

    y=mx+c

    Where price is depandant upon consumption. If we rearrange to make Consumption the subject as to make calculating Elasticity easier as it is in terms of price not consumption.



    So we want to do a kind of differentiation

    Elasticity = \dfrac{\dfrac{dD}{D}}{\dfrac{dP}  {P}} with respect to D=\dfrac{P-b}{a}


    Is this correctish?
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    By the looks of it, you want E=\dfrac{dD}{dP}, and since D = \dfrac{P-b}{a} this can be evaluated fairly easily. Also, \dfrac{dD}{D} and \dfrac{dP}{P} don't actually mean anything :p: What were you trying to do?
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    (Original post by nuodai)
    Also, \dfrac{dD}{D} and \dfrac{dP}{P} don't actually mean anything :p: What were you trying to do?
    I think it was a clumsy attempt to represent a percentage change e.g. (change in value ÷ original value) x 100.
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    (Original post by Mr M)
    I think it was a clumsy attempt to represent a percentage change e.g. (change in value ÷ original value) x 100.
    Yep

    What I am looking for is

    \dfrac{percentage \space\ change \space\ in \space\ y\space}{percentage \space\ change \space\ in \space\ x}

    for a linear function
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    (Original post by turn and fall)
    Just had an economics lesson with my mathematically inept teacher :p:

    We were discussing how price elasticity is calculated along a demand curve.

    Elasticity=\dfrac{\% \Delta D}{\% \Delta P}

    P=Price=y
    D=Consumption=x

    If we have a demand function (lets just keep it linear)

    P=aD+b


    Which is just like

    y=mx+c

    Where price is depandant upon consumption. If we rearrange to make Consumption the subject as to make calculating Elasticity easier as it is in terms of price not consumption.



    So we want to do a kind of differentiation

    Elasticity = \dfrac{\dfrac{dD}{D}}{\dfrac{dP}  {P}} with respect to D=\dfrac{P-b}{a}


    Is this correctish?
    Yes but the used form of it is:
    \epsilon_p=\frac{dD}{dP}\cdot\fr  ac{P}{D}
    that is the first derivative of the demand by price at the given point
    multiply by the priice of the unit demand (quantity) at the given point.
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    (Original post by ztibor)
    Yes but the used form of it is:
    \epsilon_p=\frac{dD}{dP}\cdot\fr  ac{P}{D}
    that is the first derivative of the demand by price at the given point
    multiply by the priice of the unit demand (quantity) at the given point.
    Lovely - that is precisely what I got doing it on paper

    \epsilon_p is elasticity of demand right?
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    (Original post by ztibor)
    Yes but the used form of it is:
    \epsilon_p=\frac{dD}{dP}\cdot\fr  ac{P}{D}
    that is the first derivative of the demand by price at the given point
    multiply by the priice of the unit demand (quantity) at the given point.
    What this guy said. To bad you'll never touch any of this on your Economics course :nopity:
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    (Original post by yoyo462001)
    What this guy said. To bad you'll never touch any of this on your Economics course :nopity:
    I try to make it interesting.
 
 
 
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