Explain the geometric method of measuring …

Elasticity on a straight line (linear) demand curve. Another method of measuring price elasticity of demand is geometric method which is used when elasticity is to be measured at different points on the straight line demand curve. This method involves the following steps as shown in the following Fig. 2.29.

(i) Straight line demand curve is first extended to both sides to join Y-axis at E and X-axis at D in Fig. 2.29.

Fig. 2.29

(ii)    Take mid-point of straight line demand curve (say, point B) which divides the demand curve into two equal portions — upper portion (say, BE) and lower portion (say, BD). Point A is located in the upper portion and point C in the lower portion.

(iii)    Elasticity at any point on straight line demand curve is worked out by dividing lower portion of the demand curve with upper portion of the demand curve. Thus:

 because B is the mid-point.
(Alternatively elasticity of demand on the mid-point of a straight line moving from left to right is 1 or unit elastic.)