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Price Elasticity Of Demand Calculator

Work out price elasticity of demand instantly with clear inputs, formula shown and shareable results.

About Price Elasticity Of Demand Calculator

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.

Formulas

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.

Worked example

With the default values below, Price Elasticity Of Demand Calculator returns Price elasticity of demand of -1.432. Change any input above and every figure here is recalculated in your browser.

Inputs used

Original price
25
New price
28
Quantity sold at original price
4,000
Quantity sold at new price
3,400

Results

Price elasticity of demand
-1.432
Price change (midpoint)
11.32%
Quantity change (midpoint)
-16.22%
Interpretation
Elastic — revenue falls when price rises

Step by step

  1. 1Values used
  2. 2Midpoint elasticity
  3. 3Revenue rule
  4. 4Price elasticity of demand= -1.432
  5. 5Price change (midpoint)= 11.32
  6. 6Quantity change (midpoint)= -16.22
  7. 7Interpretation= Elastic — revenue falls when price rises

Assumptions and limits

  • The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
  • In particular, this calculator does not take inflation, tax, fees or charges or compounding frequency into account.
  • Figures are rounded for display to 3 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
  • This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

Why is elasticity usually negative?

Because demand falls when price rises. The sign is conventional; practitioners often quote the absolute value.

Why the midpoint method?

Simple percentage change gives different answers depending on direction. Using the average of the two values removes that asymmetry.

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