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Discuss why you might use a constant elasticity demand curve to calculate consumer surplus changes from...

Discuss why you might use a constant elasticity demand curve to calculate consumer surplus changes from a project. If you are given an elasticity estimate of -0.5 and a point such as Q =2, P=$9. What is the equation for the demand function?

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Answer #1

Consumer Surplus gets to change with the elasticity of demand where consider a case when the demand is perfectly elastic than the consumer surplus would be zero as the willingness to pay of the customer is equal to the price paid and if the demand is perfectly inelastic then the consumer surplus is infinite because whatever maybe the price the quantity remains same and in this way they elasticity of demand affects the consumer surplus and that is the reason why you can calculate consumer surplus to a demand curve at constant elasticity.

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