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GOODS: When used without an adjective modifier (like "final" goods or "intermediate" goods), this generically means physical, tangible products used to satisfy people's wants and needs. This term good should be contrasted with the term services, which captures the intangible satisfaction of wants and needs. As such, you will frequently see the plural combination of these two phrases together "goods and services" to indicate the wide assortment of economic goods produced using the economy's scarce resources. As you might imagine this general notion of wants and needs satisfying goods and services pops up throughout the study of economics.

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POINT ELASTICITY:

The relative responsiveness of a change in one variable (call it B) to an infinitesimally small change in another variable (call it A). The notion of point elasticity typically comes into play when discussing the elasticity at a specific point on a curve.
Point elasticity can be calculated in a number of different ways. Sophisticated economists, using sophisticated mathematical techniques (better known as calculus) calculate point elasticity by using derivatives. Derivatives are calculus talk for infinitesimally small changes. The formula for calculating point elasticity using calculus is given as:

point
elasticity
=∂B
B
÷∂A
A
The symbol that looks like a backward six (∂) is the mathematical notation for a derivative, or infinitesimally small change. The first term on the right-hand side of this formula is the percentage change in variable B and the second term is the percentage change in variable A.

Unsophisticated folks can also calculate point elasticity without the use of sophisticated calculus. This is done with the midpoint elasticity formula, presented here:

midpoint
elasticity
=(B2 - B1)
(B2 + B1)/2
÷(A2 - A1)
(A2 + A1)/2
The first term on the right-hand side of the equation is the percentage change in variable B. The second term is the percentage change in variable A. The individual items are interpreted as this: A1 is the initial value of A before any changes, A2 is the ending value after A changes, B1 is the initial value of B before any changes, and B2 is the ending value after B changes.

This midpoint elasticity formula actually calculates the average or arc elasticity of the entire line segment. However, it also calculates the point elasticity for the midpoint of a line segment.

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Recommended Citation:

POINT ELASTICITY, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2018. [Accessed: December 10, 2018].


Check Out These Related Terms...

     | arc elasticity | coefficient of elasticity | midpoint elasticity formula | endpoint elasticity formula | point elasticity |


Or For A Little Background...

     | elasticity | price elasticity of demand | price elasticity of supply | income elasticity of demand | cross elasticity of demand |


And For Further Study...

     | elasticity and demand slope | elasticity and supply intercept | demand elasticity and total expenditure | elasticity alternatives | elasticity determinants |


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