Simplifying The Price Elasticity Of Demand
Abstract
Ockham’s Razor is a reminder to keep things simple, but this principle is often ignored in the elasticity chapters of many economics textbooks. Many texts invoke slope unnecessarily and in contradictory ways. Discussions of the determinants of the price elasticity of demand have the potential to further confuse students, as do elasticity estimates that are dated and inappropriate. Principles instructors could better explain the price elasticity of demand by concentrating on the price-quantity point on a demand curve and the mid-point formula, while avoiding rotating demand curves and relying less on simplistic determinants and outdated estimates.
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