Point method of measuring elasticity of Demand

The point method of measuring the elasticity of Demand

    Professor Marshall devised a geometrical method for measuring elasticity at a point on the demand curve. This method is used when the demand curve is linear. The following formula is used to calculate the elasticity under point method:

With the help of the point method, it is easy to point out the elasticity at any point along a linear demand curve. It can be explained by the help of the following figure

From the above figure we arrive at the conclusion that at the midpoint on the demand curve, the elasticity of demand is unity. Moving up the demand curve from the midpoint, elasticity becomes greater where the demand curve touches y-axis, elasticity is infinity. At any point below the midpoint towards the x-axis will show elastic demand. Elasticity becomes zero when the demand curve touches x-axis.