# Price Elasticity of Demand Calculator

URL: https://speedycalculator.com/calculators/finance/price-elasticity/
Last updated: 2026-10-25

> The price elasticity of demand calculator measures how much the quantity demanded changes when the price changes – using the midpoint (arc) method – and tells you whether demand is elastic, inelastic or unit elastic and what happens to total revenue.

## Inputs

- Initial price
- New price
- Initial quantity
- New quantity

## Results

- Percentage change in quantity (midpoint)
- Percentage change in price/income (midpoint)
- Price elasticity of demand
- Demand is
- Initial total revenue
- New total revenue

## Formula

```
Elasticity = % change in quantity ÷ % change in price
Midpoint % change = (new − old) ÷ ((new + old) ÷ 2) × 100
|e| > 1 elastic, |e| < 1 inelastic, |e| = 1 unit elastic
```

## Explanation

If demand is elastic, cutting the price raises total revenue; if inelastic, raising the price raises total revenue. Necessities and goods without substitutes (fuel, medicine) tend to be inelastic.

### How to use the Price Elasticity of Demand Calculator

- **Initial price**
- **New price**
- **Initial quantity**
- **New quantity**

Results update as you type, and every field accepts the units shown in its menu.

### How it works

Enter the initial and new price and the initial and new quantity demanded.

### Tips

- Use consistent periods (a year or a quarter) for flow figures and period-end values for balances.
- Average opening and closing balances when a ratio mixes a flow with a stock.
- Benchmark against competitors in the same industry.
- Read the ratio together with others – profitability, liquidity and efficiency tell different stories.

### Common mistakes to avoid

- Using sales instead of cost of goods sold for inventory ratios.
- Mixing gross, operating and net profit.
- Ignoring one-off items that distort a single year.

### Inputs explained

FieldWhat to enterInitial priceAmount in your currencyNew priceAmount in your currencyInitial quantityA numberNew quantityA number

### What each result means

- **Percentage change in quantity (midpoint)** = ([New quantity] - [Initial quantity])÷(([New quantity] + [Initial quantity])÷2)×100
- **Percentage change in price/income (midpoint)** = ([New price] - [Initial price])÷(([New price] + [Initial price])÷2)×100
- **Price elasticity of demand** = [Percentage change in quantity (midpoint)]÷[Percentage change in price÷income (midpoint)]
- **Initial total revenue** = [Initial price]×[Initial quantity]
- **New total revenue** = [New price]×[New quantity]

### Example values

How the main result changes when **Initial price** changes and everything else stays at the example values above:

Initial pricePrice elasticity of demand5-0.277.5-0.48110-1.22212.55.444151200.444

## Worked example

Inputs — Initial price: $10; New price: $12; Initial quantity: 1,000; New quantity: 800.

Results — Percentage change in quantity (midpoint) = -22.22 %; Percentage change in price/income (midpoint) = 18.18 %; **Price elasticity of demand = -1.222**; Demand is = Elastic; Initial total revenue = $10,000.00; New total revenue = $9,600.00.

## FAQ

**What is price elasticity of demand?**
The responsiveness of quantity demanded to a price change.

**What does an elasticity of −2 mean?**
A 1% price increase cuts quantity demanded by about 2%.

**Why use the midpoint method?**
It gives the same answer for price increases and decreases.

**What formula does the Price Elasticity of Demand Calculator use?**
Elasticity = % change in quantity ÷ % change in price.


## Sources

- [Corporate Finance Institute – financial ratios](https://corporatefinanceinstitute.com/)