Price Elasticity of Demand Calculator

What Is Price Elasticity of Demand Calculator?

The Price Elasticity of Demand Calculator quantifies how much quantity demanded changes when price changes. It returns the elasticity coefficient, typically negative for normal goods, indicating direction and magnitude of response. By applying standard microeconomics rules, it prevents common mistakes in sign, units, and base selection. You can enter two price–quantity observations (before/after) or a starting point with small changes. The tool outputs the elasticity value, a short interpretation (elastic, unit elastic, or inelastic), and a revenue implication note. This helps students, analysts, and managers quickly evaluate pricing moves, discounts, and promotions without manual spreadsheet work.

About the Price Elasticity of Demand Calculator

Built for clarity, this calculator emphasizes the symmetric “midpoint” approach so your answer does not depend on which period you choose as the base. It supports own‑price elasticity for goods and services, handles both increases and decreases in price, and summarizes results alongside percentage changes in price and quantity. Optional fields for labels (product name, market, time window) keep comparisons organized. The output highlights whether demand is elastic (|E| > 1), unit elastic (|E| ≈ 1), or inelastic (|E| < 1), and shows expected movement in total revenue given the sign and size of elasticity.

How to Use this Price Elasticity of Demand Calculator

1) Enter initial price P₁ and quantity Q₁. 2) Enter new price P₂ and quantity Q₂. 3) Submit to compute percentage changes using midpoints and the resulting elasticity. 4) Read the interpretation banner and the revenue note. 5) Save or copy the result for reports. For very small changes around a point, you may use the point formula with an estimated slope of the demand curve.

Examples Using the Price Elasticity of Demand Calculator

• Example 1 (Elastic): P₁=10, Q₁=100; P₂=12, Q₂=80. Midpoint %ΔQ ≈ −22.22%, midpoint %ΔP ≈ +18.18%, elasticity ≈ −1.22 ⇒ elastic; raising price reduces revenue.
• Example 2 (Inelastic): P₁=5, Q₁=100; P₂=6, Q₂=98. %ΔQ ≈ −2.02%, %ΔP ≈ +18.18%, elasticity ≈ −0.11 ⇒ inelastic; raising price increases revenue.
• Example 3 (Near unit): P₁=20, Q₁=50; P₂=19, Q₂=55. %ΔQ ≈ +9.52%, %ΔP ≈ −5.13%, elasticity ≈ −1.86 (elastic); lowering price increases revenue.

Core Formulas (rendered responsively)

Definition of own‑price elasticity of demand.

Midpoint (arc) percentage changes.

Midpoint elasticity in a single expression.

Point elasticity at a specific point on a smooth demand curve.

Total revenue. If demand is elastic, price and revenue move in opposite directions; if inelastic, they move together.

FAQs

Why is elasticity usually negative?

Because quantity demanded typically falls as price rises. Many reports show the absolute value to focus on magnitude rather than sign.

When should I use the midpoint method?

Use it whenever you have two observations and want a symmetric result that does not depend on which observation is treated as the base.

Can elasticity be zero or infinite?

Yes. Zero indicates perfectly inelastic demand (quantity unchanged), while an extremely large magnitude reflects highly elastic demand with strong sensitivity.

How does elasticity relate to total revenue?

If demand is elastic, a price rise lowers revenue; if inelastic, a price rise raises revenue; at unit elasticity, revenue is maximized locally.

Does the calculator handle cross‑price or income elasticity?

This version focuses on own‑price elasticity. Cross‑price and income elasticities require additional data on other goods or income changes.

What if my data include discounts or taxes?

Use effective prices paid by buyers for comparability. Document assumptions so repeated calculations remain consistent across periods or products.

How should I interpret values near −1?

Values close to −1 indicate unit elasticity. Small price changes will leave total revenue roughly unchanged around that operating point.