Engineering Economics – The Basics shows the typical formulas used in economic analysis with over 55 examples. Subjects such as compounding interest, economic equivalence, internal rate of return and benefit cost ratios are covered.
The midpoint formula in economics is used to measure the price elasticity of demand and yields a value that ranges from zero to negative infinity. It shows how sensitive consumers are to a change in price in a given service or product. The answer is a negative value since there is an inverse relationship between the price and quantity demanded, but economists often report the result as an absolute value by eliminating the negative sign. Also, the result is a pure number, which means it does not have any associated units. As the size of changes in price and quantity increases, the accuracy of the result decreases.