```Date: Thu, 24 May 2001 19:43:57 -0400 Reply-To: Kattamuri Sarma Sender: "SAS(r) Discussion" From: Kattamuri Sarma Subject: Fw: Price elasticity versus slope calculation Content-Type: text/plain; charset="iso-8859-1" ----- Original Message ----- From: Kattamuri Sarma Newsgroups: bit.listserv.sas-l 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 in > the logarithm of P. > where slope is simply change in D for a unit change in P. All changes are > calculated > 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 > clear: > > (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 wrote in message > news:4.3.2.7.0.20010524091720.00b0a308@pop3.norton.antivirus... > > 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 > two > > 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 > > susieli@summitry.com > > Tel: (914)243-6812 > > > ```

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