Geometric method measures elasticity of demand at different points on the demand curve. It is also known as ‘Point Method’ of measuring elasticity of demand.
The figure shows that MN is a straight line demand curve. A specific point on the demand curve is ‘P. ‘This point divides the demand curve into two parts, viz., lower part PN and upper part PM. Elasticity of demand at Point P is the ratio between lower segment and upper segment.
