The future conversation will upgrade you concerning the distinction between slope of need function and elasticity of need.
By slope regarding the need function we mean improvement in cost split because of the improvement in volume. Let P = f (Q) end up being the demand function that is inverse. Therefore, the slope associated with the need function
= absolute improvement in price/absolute improvement in amount = в€†P/в€†Q
Once again, slope means the steepness associated with the need bend. In reality, slope associated with the need function steps the steepness or flatness regarding the function.
Having said that, elasticity of demand steps the change that is relative cost and amount. Hence
Elasticity of need could be the reciprocal for the slope regarding the need function, increased by the price-quantity ratio, i.e.,
Hence, the slope and elasticity of demand are associated but they are maybe not the thing that is same. By just learning the slope of this demand function, one cannot determine the value of elasticity of need, though it is known that steeper (latter) the need curve reduced (greater) could be the elasticity of need.
This is certainly a wrong conception. In reality, there is absolutely no connection between your slope additionally the elasticity of demand. It would likely take place that the 2 need curves might have different slopes however the exact same elasticity or the 2 need curves could have exact same slopes but various elasticities.
In Fig. 2.54, we now have drawn two demand curves called DA and DB.