Laffer Curve when I began to wonder about the elasticity of the supply for labor and the shape of the Laffer Curve.
I usually use a mid-point formula but this time I wanted an exact supply elasticity formula. Robert Frank uses 1/slope times the ratio of Price to Quantity for the point formula. This makes a lot of sense to me because of the comparision between the x and y axis. But why does this formula work? The formula is Price divided by (Price minus the vertical intercept). As you can see from points A through D on the supply curve, the elasticities are the same as Mr. Frank's. This formula only uses the y axis. I'm dumfounded.