Elasticity is the ratio of one percentage change to anotherpercentage change. Why would we use...

Elasticity is the ratio of one percentage change to another percentage change. Why would we use percentage changes rather than nominal changes? Explain.e

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Expert Solution

Elasticity of Demand refers to the degree at which quantity changes due to chahe in price

We use percentage change because nominal change is not adjustable measure where as percentage change is adjusted measure, it tells the how much change in Quantity due to change in this much price but at same time Nominal change explain the total price change and tota change in quantity.

Percentage change also tells the elasticity at point kown as point elasticity where as nominal cannot tell the change individually, it tells the aggregate change

Rahul Sunny answered 2 years ago

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