This method is also called point method. To calculated elasticity of demand at any point on the Demand Curve, a tangent on that point is drawn.
According to this method.
ed = lower segment/ upper segment
In given fig. to calculate elasticity of demand at point R on the Demand Curve DD, a tangent AB has been drawn. RB is lower segment and RA is upper segment. Thus, at point R, elasticity of demany will be.
ed = lower segment/ upper segment = RB/RA
