Percentage Method:It is the most common method for measuring price elasticity of demand (Ed). This method was introduced by Prof. Marshall. This method is also known as ‘Flux Method’ or ‘Proportionate Method’ or ‘Mathematical Method’.According to this method, elasticity is measured as the ratio of percentage change in the quantity demanded to percentage change in the price.Elasticity of Demand (Ed) = Percentage change in Quantity demanded / Percentage change in PriceWhere:1. Percentage change in Quantity demanded = Change in Quantity (∆Q)/Initial Quantity (Q) x 1002. Change in Quantity (∆Q) = Q1 – Q3. Percentage change in Price = Change in Price (∆P)/ Original Price (P) x 1004. Change in Price (∆P) = Pl – PQ1-Calculate price elasticity of demand if demand increases from 4 units to 5 units due to fall in price from Rs. 10 to Rs. 8.Solution:Elasticity of demand in the given case will be:Elasticity of demand (Ed) = Percentage change in Quantity demanded/ Percentage change in PricePercentage change in Quantity demanded = Change in Quantity (∆Q)/ Initial Quantity (Q) × 100= (5-4)/4 × 100 = 25%Percentage change in Price = Change in Price (∆P)/ Initial Quantity (P) × 100= (8-10)/ 10 × 100 = -20%Ed = 20%/-25% = -1.25 (or 1.25 as only numerical or absolute value is taken)

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