Price elasticity of demand calculator
This price elasticity of demand calculator gives both methods at once. Example: if the price rises from 10 to 12 and quantity falls from 100 to 80, the midpoint method gives E = -1.222 (elastic) and the point method -1.
Example: Method: Midpoint method (arc elasticity) · Price before 10 · Price after 12 · Quantity before 100 · Quantity after 80 → Price elasticity: Midpoint method: E = -1.222 (elastic). Source: Mankiw: Principles of Economics – Elasticity and Its Application (Midpoint Method). Updated: .
How it is calculated
The price elasticity of demand tells you by how many percent the quantity demanded changes when the price rises by 1%. It is normally negative because higher prices reduce demand, so people often look at its absolute value.
Two methods
The midpoint method measures both changes against the average of the old and new value, so the result is the same whether the price rises or falls. The point method uses the starting values as the base and gives slightly different numbers depending on direction.
Example
Price 10 → 12, quantity 100 → 80. Midpoint: price change 2 ÷ 11 = 18.18%, quantity change -20 ÷ 90 = -22.22%, so E = -1.222. Point method: a 20% price change and a -20% quantity change give E = -1. Revenue falls from 1,000 to 960.
- |E| > 1: elastic, quantity reacts more than proportionally.
- |E| < 1: inelastic, quantity reacts less than proportionally.
Frequently asked questions
How do you calculate price elasticity of demand?
Percentage change in quantity divided by percentage change in price. In the example -22.22% ÷ 18.18% = -1.222 (midpoint method).
Why do the midpoint and point methods differ?
The point method measures changes against the starting value, the midpoint method against the average of both values. With larger changes the results therefore drift apart.
What do elastic and inelastic mean?
With elastic demand (|E| > 1) quantity changes by a larger percentage than price, with inelastic demand (|E| < 1) by a smaller one. That describes the reaction but does not recommend a price.
Sources and legal basis
- Mankiw: Principles of Economics – Elasticity and Its Application (Midpoint Method)
- Wikipedia – Price elasticity of demand
- Wikipedia – Preiselastizität der Nachfrage (price elasticity of demand)
As of: · Editorial policy
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