Date: Thu, 24 May 2001 19:43:57 -0400
Reply-To: Kattamuri Sarma <kssarma@WORLDNET.ATT.NET>
Sender: "SAS(r) Discussion" <SAS-L@LISTSERV.UGA.EDU>
From: Kattamuri Sarma <kssarma@WORLDNET.ATT.NET>
Subject: Fw: Price elasticity versus slope calculation
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----- Original Message -----
From: Kattamuri Sarma <firstname.lastname@example.org>
Sent: Thursday, May 24, 2001 7:42 PM
Subject: Re: Price elasticity versus slope calculation
> Hello Susie:
> Suppose demand is a function of Price.(P) and income (Y). D = D(P,Y).
> The Price elasticity is = change in the logarithm of D for a unit change
> the logarithm of P.
> where slope is simply change in D for a unit change in P. All changes are
> at a given level of income.
> In practice, at any given point, elasticity is calculated as (percentage
> change in D ) / (percentage change in P).
> and slope is calculated as (change in D) / (Change in P). The relationship
> between elasticity and slope should be
> (change in D/ D) / (Change in P / P ) = elasticity.
> = ((change in D / Change in P))* ( P/D).
> = Slope * (P/D).
> So elasticity = slope * (Price/Demand) at any given point (D,P).
> Hope this is helpful.
> Kattamuri Sarma
> Susie Li <susieli@SUMMITRY.COM> wrote in message
> > SAS-Lers,
> > In a pricing study, can anyone explain to me simply the mathematical
> > relationship between "price elasticity" and a straightforward
> > "slope"? And, what are the advantages and disadvantages of using these
> > measurements?
> > Price elasticity=%change in quantity sold due to %change in price
> > Slope=change in quantity sold due to change in price
> > Thanks,
> > Susie Li
> > Summitry Integrated Resources
> > Yorktown Heights, New York
> > email@example.com
> > Tel: (914)243-6812