Own Price Elasticity of Demand:
Own price elasticity of demand is the degree of responsiveness of the quantity demanded of a commodity to a change in its own price.
Measurement of Own Price Elasticity of Demand
Own price elasticity of demand is measured as percentage change in quantity demanded divided by percentage change in the price of the commodity. It can be measured at a point or an arc-method
Where
Q =the original quantity
P = the original price
ΔQ = change in quantity demanded
= New quantity minus the original quantity
ΔP = change in price
= New price minus the original price
The above formulars are for the measurement of point elasticity of demand. For the arc measurement, the definitions of Q and P will change
P = ½ (P original + P new)
Q = ½ Q original + Q new)