What is the midpoint method?

The midpoint (arc elasticity) method averages the two price and quantity values as the base for percentage changes, giving a consistent result regardless of which direction the price moves.

Why is PED usually negative?

By the law of demand, price and quantity move in opposite directions, producing a negative ratio. The absolute value is often used for classification: |PED| > 1 = elastic, |PED| < 1 = inelastic, |PED| = 1 = unit elastic.

What does elastic demand mean for revenue?

When demand is elastic (|PED| > 1), lowering price raises total revenue because the quantity increase outweighs the price cut. Raising price reduces revenue.

What does inelastic demand mean for revenue?

When demand is inelastic (|PED| < 1), raising price raises total revenue because the quantity drop is proportionally smaller than the price increase. Lowering price reduces revenue.

Yes — Giffen goods and Veblen goods can have positive PED, where demand rises as price rises. This calculator handles positive values and labels them accordingly.

What if my two prices are the same?

PED is undefined when there is no price change. The calculator will display an error and ask you to enter two distinct price values.

Price Elasticity of Demand Calculator

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

Enter two price-quantity data points to instantly calculate the price elasticity of demand and see how revenue changes.

Enter Price & Quantity Pairs

Point 1 — Original

Price ($)

Quantity

Point 2 — New

Price ($)

Quantity

Enter your price and quantity data, then click Calculate.

Summary

Enter two price-quantity data points to instantly calculate the price elasticity of demand and see how revenue changes.

How it works

Enter the original price and quantity (Point 1).
Enter the new price and quantity (Point 2).
The midpoint formula computes the percentage changes in price and quantity.
PED = % change in quantity demanded / % change in price.
The result is classified and revenue impact is calculated automatically.

Use cases

Decide whether raising prices will increase or decrease total revenue.
Evaluate how a promotional discount is likely to affect sales volume.
Support pricing strategy decisions with quantitative elasticity data.
Teach or study microeconomics concepts interactively.
Compare elasticity across different product categories or markets.
Model revenue sensitivity before rolling out a price change company-wide.

Frequently Asked Questions

Last updated: 2026-06-09 · Reviewed by Nham Vu