This method is also associated with the name of Dr. Marshall. According to this method, “price elasticity of demand is the ratio of percentage change in the amount demanded to the percentage change in price of the commodity.”
Implications:
(a) This method should be used when there is a very small change in price and quantity demanded.
(b) The coefficient of price elasticity of demand is always negative. It is because when price changes, demand changes in the opposite direction. But by convention, we ignore negative sign.
(c) The elasticity of demand is relative. It is not expressed in any unit rather expressed in percentage or infractions.
