Flux Method

This method known as Flux’s Method is a mathematical measurement of elasticity. The formula for finding out the coefficient elasticity is as follows:

Elasticity of Demand

E_P = (-) Percentage change in quantity demanded (Q) / Percentage change in price (P)
Change in quantity demanded (Q₁ – Q₀ / Original quantity (Q₀) x 100
Or,    E_P = (-)
Change in price (P₁ – P₀) / original price (P₀) x 100

= (-) ∆Q /Q₀ ÷ ∆ P / P₀

Where,
= (-) ∆Q /Q₀ x P₀ / ∆P  ∆Q = Change in demand (Q₁ – Q₀)
Q₀ = Original demand
∆P = Change in price (P₁ – P₀)
 = (-) ∆Q / ∆P x P₀ /Q₀ P₀  = Original price

Elasticity of demand equal to one represents the dividing line between elastic and inelastic demand. Whenever elasticity is less than one, it shows that the demand increases less than in proportion when the price falls and decreases less than in proportion when the price rises. But, when elasticity is greater than one, demand is more elastic because demand increases more than in proportion to fall in price and vice versa. Unity elasticity represents a situation where demand is neither elastic nor inelastic.