Work out price elasticity of demand instantly with clear inputs, formula shown and shareable results.
Elasticity is the percentage change in quantity divided by the percentage change in price. This calculator uses the midpoint (arc) method so the answer is the same whether you move from the old price to the new one or back again. Values below -1 mean demand is elastic and a price rise reduces revenue.
Midpoint elasticity
E = [(Q1-Q0)/((Q0+Q1)/2)] / [(P1-P0)/((P0+P1)/2)]
Revenue rule
Elastic (|E|>1): raise volume, cut price. Inelastic (|E|<1): raise price.
Because demand falls when price rises. The sign is conventional; practitioners often quote the absolute value.
Simple percentage change gives different answers depending on direction. Using the average of the two values removes that asymmetry.