# What are the various methods of measuring Elasticity of Demand?

Elasticity of demand is known as price-elasticity of demand. Because elasticity of demand is the degree of change in amount demanded of a commodity in response to a change in price. Price elasticity of demand can be measured through three popular methods. These methods are:

1. Percentage method or Arithmetic method

2. Total Expenditure method

3. Graphic method or point method.

1. Percentage method:-

According to this method price elasticity is estimated by dividing the percentage change in amount demanded by the percentage change in price of the commodity. Thus given the percentage change of both amount demanded and price we can derive elasticity of demand. If the percentage charge in amount demanded is greater that the percentage change in price, the coefficient thus derived will be greater than one.

If percentage change in amount demanded is less than percentage change in price, the elasticity is said to be less than one. But if percentage change of both amount demanded and price is same, elasticity of demand is said to be unit.

2. Total expenditure method

Total expenditure method was formulated by Alfred Marshall. The elasticity of demand can be measured on the basis of change in total expenditure in response to a change in price. It is worth noting that unlike percentage method a precise mathematical coefficient cannot be determined to know the elasticity of demand.

By the help of total expenditure method we can know whether the price elasticity is equal to one, greater than one, less than one. In such a method the initial expenditure before the change in price and the expenditure after the fall in price are compared. By such comparison, if it is found that the expenditure remains the same, elasticity of demand is One (ed=I).

If the total expenditure increases the elasticity of demand is greater than one (ed>l). If the total expenditure diminished with the change in price elasticity of demand is less than one (ed<I). The total expenditure method is illustrated by the following diagram. 