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in Price Elasticity of Demand by (63.4k points)

How is price elasticity of demand measured?

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It is measured as percentage change in quantity demanded divided by the percentage change in price, other things remaining equal. That is,

Ep = Percentage Change in Quantity Demanded/Percentage change in price

In other words, elasticity is the percentage change in quantity divided by the percentage change in price. If the percentages are known quantities, then the numerical size of Ep can be easily calculated. Let us suppose that the percentages are 5 for quantity and 1 for price, and that the price falls, since it falls, the price changes by minus 1%. Then,

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