Case 1
- Initial price
- 10
- New price
- 12
- Initial quantity demanded
- 100
- New quantity demanded
- 80
-1.222
Open with these valuesPrice Elasticity of Demand Calculator
-1.222
Result: -1.222This is the midpoint method: each percent change is divided by the average of its two values, not by the starting one. That is why 10 → 12 with 100 → 80 gives −1.222 and not the −1.0 of the simpler formula. The sign stays, so a normal good comes out negative.
Worked examples
Case 2
- Initial price
- 5
- New price
- 6
- Initial quantity demanded
- 100
- New quantity demanded
- 90
-0.579
Open with these valuesCase 3
- Initial price
- 8
- New price
- 10
- Initial quantity demanded
- 200
- New quantity demanded
- 150
-1.286
Open with these valuesHow it's calculated
PED = %ΔQ ÷ %ΔP, each %Δ = (new − old) ÷ ((new + old) ÷ 2)
- StepEnter the price before and after the change, both in the same currency.
- StepEnter the quantity demanded at each of those two prices.
- StepEvery percent change is measured against the average of its pair, not against the starting value.
- ResultRead the coefficient: below −1 demand is elastic, between −1 and 0 it is inelastic.
Reference table
| Old price, new price, old quantity, new quantity | Demand | Elasticity |
|---|---|---|
| 20, 25, 50, 45 | Inelastic, price rising | -0.474 |
| 5, 6, 100, 90 | Inelastic, price rising | -0.579 |
| 10, 12, 100, 80 | Elastic, price rising | -1.222 |
| 12, 10, 80, 100 | The same move reversed | -1.222 |
| 8, 10, 200, 150 | Elastic, price rising | -1.286 |
Questions
What is the price elasticity of demand?
It measures how strongly the quantity demanded responds to a change in price: the percent change in quantity divided by the percent change in price. An absolute size above 1 means demand is elastic and the quantity reacts a lot; below 1 it is inelastic and the quantity barely moves.
What is the midpoint formula, and how does it differ from the simple one?
The midpoint or arc method bases each percent change on the average of the two values instead of the starting value. For 10 → 12 with 100 → 80 it gives −1.222, while dividing by the starting values gives −1.0. The average makes the answer the same whether the price rises or falls, which the simple version does not.
Why is the result negative?
Demand curves slope downward, so a price rise and a quantity fall have opposite signs and their ratio is negative. This calculator keeps that sign instead of hiding it. Economists often quote the absolute value and say a yacht has an elasticity of two, meaning −2.
What is the difference between elastic and inelastic demand?
Elastic demand, an absolute value above 1, means buyers are price sensitive and a small rise costs a larger share of the quantity. Inelastic demand, below 1, means the quantity falls only a little when the price rises. At exactly 1 the two changes cancel and demand is unit elastic.
How does elasticity affect total revenue?
Total revenue is price times quantity. With inelastic demand a price rise increases revenue, because the quantity falls proportionally less. With elastic demand the same rise reduces revenue, because the quantity falls proportionally more.
Should I use the point method or the midpoint method?
Use the midpoint method, as here, for elasticity between two observed price and quantity pairs, because it returns one value regardless of direction. The point method uses calculus on a demand function and gives the elasticity at a single exact point. For two observations the midpoint method is the standard choice.
Sources and last check
Information, not professional advice.