Nama : Hilmi Cahya Rinardi

NRP : 2516100107
DEMANDS ELASTICITY CURVE
1. Linear Demand Curve
A linear demand curve is the graphical representation of the relationship between the price
of a good and the quantity of that good consumers are willing to pay at a certain price at a
point in time (Chron 2016)

We can see that the curves slope face downward, it means that quantity demanded and
price have a contradiction relationship. Elasticity decreases along a linear demand curve
as the price falls. Or we can say linear demand curves gradient is negative. in real life this
event happen rarely because the relationship between demand and price is not always
constant. Also, demand depends in large part on elasticity of demand, or how consumers
react to a change in price.
I will give some example of linear demand curve equation, I want to calculate the
elasticity of demand for a price change from $10 per unit to $20 per unit. The percentage
change in price is 200%, because the change in price is $10. As P rises, quantity
demanded falls from 100 units to 40 units, a decline of 60 percent. Thus, the price
elasticity of demand is 60% divided by 200%, which equals - 0.3. (Ignore the minus sign
and just say that the price elasticity of demand is 0.4)
In a linear curve, the elasticity demand equation is

= ( ) ( )

The slope is constant If the demand curve is linear (a straight line). So DQ/DP doesn't
change as we move along the curve. However, the ratio of P to Q, changes
continuously along the demand curve. The slope of the demand curve shown above is
- 1/6 (= 10/-60). At a certain point will create the Ed result equal to 1 when its in
unitary elastic point.
2. Two intersecting demand curves

In this case we have 2 different line that have an intersection at point E. we can
compare this 2 line elasticity by using the intersection point and gradient. It will be
noticed from the figure that demand curve CD is flatter than the demand curve AB.
Now, it can be easily proved that at every
price on the flatter demand curve CD, price
elasticity will be greater than that on the
relatively steeper demand curve AB. Let us
go to equation, elasticity of line AB can find
it by using AB = OP/PA. For the CD line we
can find it using CD = OP/PC. Different
distance PC and PA will automatically
resulted in OP/CD > OP/AB.
So here we can conclude that at the same
price intersection point; elasticity is greater
on the flatter demand curve, as compared to the steeper demand curve.

3. Elasticity on a non linear curve

In this curve, elasticity is measured from one point on a non-linear demand curve, the
percentage formula used is varied with the direction and magnitude of the change being
considered. Elasticity measured from point A, so the ratio P/Q is given. The ratio P and
Q is the slope joining point A to the point reached on the curve after the price has
changed. The highest ratio occur when the Price at its highest point, and the lowest ratio
occur when quantity at the highest point.

4. Elasticity by the exact method

When elasticity is related to the slope of the tangent to demand curve at some point, there
is an unique value of elasticity at that point. This method the ratio P/Q is taken as the
reverse of the slope of the line that has tangent in point a. only one point of the curve is
used, so there is no averaging of changes in p and q. thus, there is only one measured
elasticity at point a. its P or Q divided by P or Q measured along the tangent.
5. Short-run and Long-run demand curve

D1 is the long run demand curve showing quantity that will be bought after consumers
become fully adjusted to each given price. In D1 line there are a short-run demand curve
which shows the quantities that will be bought at each price when consumers are fully
adjusted to the price at which that particular short-run curve intersects the long-run curve.
At every point on the short-run curve consumers are not fully adjusted to the price they
face, because they have an inappropriate stock of durable goods. The line Ds2 shows
short-run variations in demand when consumers are fully adjusted to price p2.

REFERENCES :
Chron, 2016, accessed at 10 October 2016
<http://smallbusiness.chron.com/linear-demand-curve-25140.html>
Richard & Lipsey, 2011, Economics, Oxford University Press, New York.