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Price Elasticity of Demand Calculator

Find the price elasticity of demand.

How it is calculated

You enter two percentage changes you already know, not prices or quantities. The tool divides them: E = %ΔQ / %ΔP, where %ΔQ is the percentage change in quantity demanded and %ΔP the percentage change in price. It does not apply the midpoint formula; it uses the percentages exactly as typed. Use negative numbers for decreases.

The label depends on the absolute value |E|: above 1 is Elastic, exactly 1 is Unit elastic, below 1 is Inelastic. A price change of 0 gives no result because the ratio is undefined. Demand curves normally slope downwards, so E is usually negative.

Worked example

A shop raises a price by 10% and sales volume falls by 15%. So %ΔQ = −15 and %ΔP = 10. E = −15 / 10 = -1.50. Because |−1.50| is greater than 1, the tool labels demand Elastic: the quantity falls by proportionally more than the price rose, so total revenue goes down. If volume had fallen by only 4%, E would be −0.40, which is inelastic, and revenue would rise.

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Common mistakes

  • Entering the new price or quantity instead of the percentage change. The fields take changes such as 10 and −15, not 110 or 85.
  • Leaving out the minus sign on a fall in quantity. A positive result with a price rise would imply demand grew, which is a different (unusual) case.
  • Entering the percentage changes as decimals (0.10) in one field and as whole numbers (15) in the other. Both must use the same scale.
  • Reading elasticity as a constant. It differs along a demand curve and between small and large price changes.
  • Assuming the sign decides the label. Only the absolute value is compared with 1, so −1.50 and 1.50 are both elastic.

About this calculator

This calculator finds the price elasticity of demand — percentage change in quantity demanded divided by percentage change in price — from the two percentage changes you enter. If you start from raw prices and quantities, work out each percentage change first; the midpoint (arc) method, which divides each change by the average of the start and end values, gives the same answer whichever direction the price moved.

It's used by economics students working through supply-and-demand problem sets, and by retailers and pricing managers deciding whether raising or lowering a price will increase total revenue — a value below 1 (inelastic) suggests a price hike will grow revenue, while above 1 (elastic) suggests it will shrink it.

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