Price Elasticity of Demand Calculator

What this tool does

Elasticity is the percentage change in quantity divided by the percentage change in price. The midpoint method used here measures both changes against the average of before and after, so going from 10 to 12 and back from 12 to 10 gives the same answer — the simple percentage method does not. Beyond −1 demand is elastic and a price rise loses revenue; between 0 and −1 it is inelastic and a rise brings more in. Two observations only give one point of the curve, and anything else that changed at the same time ends up in the number.

Formula

E = [(Q₂ − Q₁) ÷ ((Q₁ + Q₂) ÷ 2)] ÷ [(P₂ − P₁) ÷ ((P₁ + P₂) ÷ 2)]

Variables

Worked example

Limitations

• The result is an estimate based only on the values you type. Real situations often include factors this calculator does not know about.
• The tool works with whatever currency you use for the inputs; it does not convert between currencies.