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 <kssarma@worldnet.att.net>
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 <susieli@SUMMITRY.COM> 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
>
>
>