What is price elasticity of demand?

Price elasticity of demand (PED) measures the percentage change in quantity demanded divided by the percentage change in price. It tells you how responsive buyers are to price changes.

Why does the result show a negative number?

PED is almost always negative because price and quantity move in opposite directions — when price rises, demand falls. Economists typically report the absolute value (|PED|) when classifying elasticity.

What is the midpoint method?

The midpoint method uses the average of old and new values as the base for percentage changes, giving the same result whether price rises or falls. The formula is: PED = ((Q2−Q1) / ((Q1+Q2)/2)) / ((P2−P1) / ((P1+P2)/2)).

What does unit elastic mean?

Unit elastic (|PED| = 1) means a 1% price increase causes exactly a 1% drop in quantity demanded, so total revenue stays the same.

How does elasticity affect revenue?

If demand is elastic (|PED| > 1), raising prices reduces total revenue. If demand is inelastic (|PED| < 1), raising prices increases total revenue. At unit elasticity, revenue is unchanged.

Price Elasticity Calculator

Name: Price Elasticity Calculator
Availability: InStock
Author: Nham Vu

Enter old and new price and quantity to calculate price elasticity of demand and see if demand is elastic or inelastic.

Price & Quantity Inputs

Price

Old Price

New Price

Quantity Demanded

Old Quantity

New Quantity

Elasticity Reference

|PED| > 1 Elastic — quantity is sensitive to price; lower price raises revenue

|PED| = 1 Unit elastic — revenue unchanged by price change

|PED| < 1 Inelastic — quantity barely changes; raise price to raise revenue

|PED| = 0 Perfectly inelastic — demand fixed regardless of price

|PED| = ∞ Perfectly elastic — any price increase drops demand to zero

Summary

Enter old and new price and quantity to calculate price elasticity of demand and see if demand is elastic or inelastic.

How it works

Enter the original price and the new (changed) price.
Enter the original quantity demanded and the new quantity demanded.
The calculator applies the midpoint formula: PED = (ΔQ / Q_avg) / (ΔP / P_avg).
The result is interpreted as elastic, inelastic, unit elastic, perfectly elastic, or perfectly inelastic.
A revenue impact note shows whether total revenue will rise, fall, or stay the same after the price change.

Use cases

Decide whether to raise or lower prices to maximize revenue.
Evaluate demand sensitivity before launching a sale or discount.
Compare elasticity across product lines to prioritize pricing strategy.
Estimate how price changes will affect unit sales volume.
Teach or study microeconomics pricing concepts interactively.

Frequently Asked Questions

Last updated: 2026-07-01 · Reviewed by Nham Vu