i want to know the logic behind the price elasticity of demand formula:
(q1 - q2)/(q1+q2)*(p1+p2)/(p1-p2)
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economics query of elasticity
Replies (1)
It is a formula for Arc elasticity.
It is because of the question arise which price and quantity should be taken as base. So the average of both are taken. Both the sums are divided by two and thus both 2's are cancelled. Ok
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