Is there any logic to having elasticities calculated as Qty vs Price? Gradients are calculated as rise over run, why is elasticity back to front? I know elasticity is %'age change and it’s not calculating the gradient either so it’s not quite the same in these respects either but it would be easier to remember this if I had some sort of logic behind why we flip the axes for this calculation?
The lack of logic stems not from having elasticities calculated as %ΔQ / %ΔP, but from (stupidly) having quantity on the horizontal axis and price on the vertical.
Price/Quantity graphs were developed by economists, not mathematicians. It’s just another example of the catastrophes that occur when you allow nonmathematicians to employ mathematics.
Gocha :). Having said that, now I’m rethinking about what everything would look like if the axes were reversed and hmm, requires some thought.
I will have to dissent.
The elasticity formula is based on mathematics yeah (as the other 99.99% formulas that exist in all sciences), but its interpretation is in an economical sense. What is the variation of the quantity produced / demanded due a change in the price?: %ΔQ / %ΔP
In a mathematical derivative you calculate dx / dy where y is the control variable, not x.
In the case of the elasticity formula, the control variable is price because we have discretionary power to change prices in the real world to influence production. Economists found this fundamental and based on this information created such formulas.
I’m not sure why you’re dissenting, or with what you disagree.
I agree that price is the independent variable and quantity is the dependent variable.
In mathematics, it’s customary to plot the independent variable on the horizontal axis and the dependent variable on the vertical axis. But in economics, price is plotted along the vertical axis and quantity along the horizontal, the opposite of customary mathematical practice.
Ah didn’t know this, very useful, thanks for that!