Price Elasticity of Demand Calculator
Find how demand responds to a price change.
Results update as you type.
How it works
Price elasticity of demand measures how sensitive customer demand is to a change in price, and this calculator finds it from two price-and-quantity observations using the midpoint method. You enter the initial price and quantity and the new price and quantity, and it returns the elasticity. The value is the percentage change in quantity divided by the percentage change in price. Because raising or lowering price should give a consistent measure, the calculator uses the midpoint method, dividing each change by the average of the old and new values rather than by the starting value, which avoids the asymmetry of the simple percentage approach. Interpretation hinges on the magnitude: if it is greater than one, demand is elastic, meaning quantity responds strongly to price and cutting price can raise total revenue; if it is between zero and one, demand is inelastic, so quantity barely moves and raising price increases revenue; a value of exactly one is unit elastic. Elasticity is usually negative because demand falls as price rises, and economists often quote the absolute value. Businesses use it for pricing strategy, revenue optimisation, and forecasting demand, while economists use it to study markets and taxes. Enter your two prices and quantities to compute the price elasticity of demand.
E = %ΔQ / %ΔP (midpoint method)
Price elasticity of demand divides the percentage change in quantity demanded by the percentage change in price. This calculator uses the midpoint, or arc, method, which computes each percentage change against the average of the starting and ending values, giving the same result whether price rises or falls. Demand is elastic if the magnitude exceeds one, inelastic if below one.
Source:Microeconomics
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Worked example
How to use this calculator
- 1
Enter your values
Enter initial price, new price, initial quantity and new quantity.
- 2
Adjust the options
Fine-tune any options to match your situation.
- 3
Read your result
Price elasticity of demand updates instantly as you type — no button to press.
Frequently asked questions
What is price elasticity of demand?
Price elasticity of demand measures how much the quantity customers buy changes when the price changes. It is the percentage change in quantity divided by the percentage change in price. A large magnitude means demand is very responsive to price, while a small magnitude means buyers barely change their purchases when the price moves.
What is the midpoint method?
The midpoint, or arc, method calculates each percentage change relative to the average of the starting and ending values rather than the starting value alone. This gives the same elasticity whether the price rises or falls between the two points, avoiding the inconsistency of the simple method, which is why this calculator uses it for reliable results.
What does elastic versus inelastic mean?
Demand is elastic when the elasticity magnitude exceeds one, meaning quantity changes proportionally more than price, so lowering price can raise total revenue. It is inelastic when the magnitude is below one, meaning quantity changes little, so raising price increases revenue. A magnitude of exactly one is unit elastic, where revenue stays the same.
Why is elasticity usually negative?
Elasticity is typically negative because demand and price move in opposite directions: raising the price reduces quantity demanded, and lowering it increases quantity. The negative sign reflects this inverse relationship. Economists often drop the sign and refer to the absolute value, so a value described as 1.2 usually means an elasticity of negative 1.2.
How do businesses use price elasticity?
Businesses use elasticity to set prices for maximum revenue or profit, judge how a price change will affect sales volume, and design promotions. If demand is inelastic, a price increase raises revenue; if elastic, a price cut may. It also informs forecasting, product positioning, and how to respond to competitors' pricing moves.