CLEAR IT UP

Is the elasticity the slope?
It is a common mistake to confuse the slope of either the supply or demand curve with its elasticity. The slope is the

rate of change in units along the curve, or the rise/run (change in y over the change in x). For example, in Figure 5.2,

at each point shown on the demand curve, price drops by $10 and the number of units demanded increases by 200

compared to the point to its left. The slope is –10/200 along the entire demand curve and does not change. The

price elasticity, however, changes along the curve. Elasticity between points A and B was 0.45 and increased to 1.47

between points G and H. Elasticity is the percentagechange, which is a different calculation from the slope and has

a different meaning.

When we are at the upper end of a demand curve, where price is high and the quantity demanded is low, a small

change in the quantity demanded, even in, say, one unit, is pretty big in percentage terms. A change in price of, say,
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