Geometric method measures price elasticity of demand at different points on the demand curve. It is also called point method of measuring elasticity of demand.
The method can be understood with the help of the following figure:
In the mentioned figure, MN is a straight line demand curve. P is a point which divides the demand curve into two segments, viz, lower segment PN and upper segment PM. Elasticity of demand at point P is estimated as the ratio between lower segment (PN) and upper segment (PM). Thus,
