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Simplifying the Price Elasticity of Demand

Author

Listed:
  • Thomas Andrews
  • Cynthia Benzing

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curve and the mid-point formula, while avoiding rotating demand curves and relying less on simplistic determinants and outdated estimates.

Suggested Citation

  • Thomas Andrews & Cynthia Benzing, 2010. "Simplifying the Price Elasticity of Demand," Journal for Economic Educators, Middle Tennessee State University, Business and Economic Research Center, vol. 10(1), pages 1-13, Summer.
    • Handle: RePEc:mts:jrnlee:v:10:y:2010:i:1:p:1-13
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    File URL: http://frank.mtsu.edu/~jee/2010/1pp1to13MS808.pdf
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    References listed on IDEAS

    as
    1. Lester D. Taylor & H.S. Houthakker, 2010. "Consumer Demand in the United States," Springer Books, Springer, number 978-1-4419-0510-9, January.
    2. Justin P. Johnson & David P. Myatt, 2006. "On the Simple Economics of Advertising, Marketing, and Product Design," American Economic Review, American Economic Association, vol. 96(3), pages 756-784, June.
    3. Meyerhoefer Chad D. & Zuvekas Samuel H, 2008. "The Shape of Demand: What Does It Tell Us about Direct-to-Consumer Marketing of Antidepressants?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(2), pages 1-34, January.
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    More about this item

    Keywords

    elasticity of demand; price elasticity; demand;
    All these keywords.

    JEL classification:

    • A1 - General Economics and Teaching - - General Economics
    • A2 - General Economics and Teaching - - Economic Education and Teaching of Economics

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