What is price elasticity of demand?
Type a starting price and the quantity sold at it, then a new price and the new quantity. The price elasticity of demand calculator uses the midpoint method, says whether demand is elastic, inelastic or unit elastic, and shows how revenue changes.
- Price elasticity of demand
- 0.45
The price elasticity of demand is 0.45: demand is inelastic.
- Demand is
- inelastic
- Elasticity with its sign
- -0.4483
- % change in quantity
- 6.9%
- % change in price
- -15.38%
- Revenue before
- $196,000.00
- Revenue after
- $180,000.00
- Change in revenue
- -$16,000.00
Price elasticity of demand: 0.45. The price elasticity of demand is 0.45: demand is inelastic.
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How to calculate
Finds the price elasticity of demand by the midpoint method from two prices and the quantities sold at each, says whether demand is elastic, inelastic or unit elastic, and shows the change in revenue.
Example with the default inputs (Starting price $70.00, Quantity at the starting price 2,800, New price $60.00, Quantity at the new price 3,000): The price elasticity of demand is 0.45: demand is inelastic.
Method: Elasticity = (% change in quantity) ÷ (% change in price), where each % change = (new − old) ÷ ((new + old) ÷ 2) × 100 (the midpoint method), shown without its sign.
- The midpoint (arc) method, so going from A to B gives the same elasticity as going from B to A.
- Everything else that affects demand stays the same between the two points.
- Prices are at least $0.01; quantities are 0 or more, not both 0.
Worked examples
Each example is checked against the calculator on every build.
- Starting price $70.00, Quantity at the starting price 2,800, New price $60.00, Quantity at the new price 3,000 gives Price elasticity of demand 0.448276, Demand is inelastic, % change in quantity 6.896552%, % change in price -15.384615%, Revenue before $196,000.00, Revenue after $180,000.00, Change in revenue -$16,000.00.Source: OpenStax, Principles of Economics 3e, §5.1 Price Elasticity of Demand and Price Elasticity of Supply (midpoint method: % change = (new − old) ÷ ((new + old) ÷ 2) × 100; elasticity = % change in quantity ÷ % change in price; from $70 and 2,800 to $60 and 3,000 the elasticity is 0.45, inelastic; elastic above 1, unitary at 1, inelastic below 1), https://openstax.org/books/principles-economics-3e/pages/5-1-price-elasticity-of-demand-and-price-elasticity-of-supply (retrieved 2026-10-02) (6.9%, −15.4%, 0.45)
- Starting price $4.00, Quantity at the starting price 6, New price $6.00, Quantity at the new price 4 gives Price elasticity of demand 1, Demand is unit elastic, % change in quantity -40%, % change in price 40%, Change in revenue $0.00.Source: OpenStax, Principles of Economics 3e, §5.1 Price Elasticity of Demand and Price Elasticity of Supply (midpoint method: % change = (new − old) ÷ ((new + old) ÷ 2) × 100; elasticity = % change in quantity ÷ % change in price; from $70 and 2,800 to $60 and 3,000 the elasticity is 0.45, inelastic; elastic above 1, unitary at 1, inelastic below 1), https://openstax.org/books/principles-economics-3e/pages/5-1-price-elasticity-of-demand-and-price-elasticity-of-supply (retrieved 2026-10-02)
- Starting price $10.00, Quantity at the starting price 100, New price $12.00, Quantity at the new price 70 gives Price elasticity of demand 1.941176, Demand is elastic, Elasticity with its sign -1.941176, % change in quantity -35.294118%, % change in price 18.181818%, Change in revenue -$160.00.Source: OpenStax, Principles of Economics 3e, §5.1 Price Elasticity of Demand and Price Elasticity of Supply (midpoint method: % change = (new − old) ÷ ((new + old) ÷ 2) × 100; elasticity = % change in quantity ÷ % change in price; from $70 and 2,800 to $60 and 3,000 the elasticity is 0.45, inelastic; elastic above 1, unitary at 1, inelastic below 1), https://openstax.org/books/principles-economics-3e/pages/5-1-price-elasticity-of-demand-and-price-elasticity-of-supply (retrieved 2026-10-02)
- Starting price $5.00, Quantity at the starting price 50, New price $6.00, Quantity at the new price 50 gives Price elasticity of demand 0, Demand is perfectly inelastic, Change in revenue $50.00.Source: OpenStax, Principles of Economics 3e, §5.1 Price Elasticity of Demand and Price Elasticity of Supply (midpoint method: % change = (new − old) ÷ ((new + old) ÷ 2) × 100; elasticity = % change in quantity ÷ % change in price; from $70 and 2,800 to $60 and 3,000 the elasticity is 0.45, inelastic; elastic above 1, unitary at 1, inelastic below 1), https://openstax.org/books/principles-economics-3e/pages/5-1-price-elasticity-of-demand-and-price-elasticity-of-supply (retrieved 2026-10-02)
How it works
With a starting price P₁ and quantity Q₁, and a new price P₂ and quantity Q₂:
- % change in quantity = (Q₂ − Q₁) ÷ ((Q₁ + Q₂) ÷ 2) × 100
- % change in price = (P₂ − P₁) ÷ ((P₁ + P₂) ÷ 2) × 100
- signed elasticity = % change in quantity ÷ % change in price
- price elasticity of demand = the absolute value of the signed elasticity
- revenue before = P₁ × Q₁; revenue after = P₂ × Q₂; change = after − before
Demand is perfectly inelastic when the elasticity is exactly 0, unit elastic when it is 1 (within 10⁻⁹), elastic above 1, and inelastic between 0 and 1.
Rules
- Prices are at least $0.01 and at most $1 trillion; quantities are 0 or more and at most 10¹⁵.
- The two prices must differ (no answer otherwise), and the quantities must not both be 0 (no answer).
- Each percent change is computed as 200 × (new − old) ÷ (new + old), the same value, in double precision. Everything else that affects demand is taken to stay the same.
Output format. Elasticity with up to 2 decimals, the signed value with up to 4; percent changes with up to 2 decimals; money in dollars and cents, rounded half up.
Worked examples by hand
$70 and 2,800 units to $60 and 3,000 units. % change in quantity = 200 ÷ 2,900 × 100 = 6.90%; % change in price = −10 ÷ 65 × 100 = −15.38%. Elasticity = 6.90 ÷ 15.38 = 0.45: inelastic. Revenue goes from $196,000 to $180,000, a change of −$16,000.
$4 and 6 units to $6 and 4 units. % change in quantity = −2 ÷ 5 = −40%; % change in price = 2 ÷ 5 = 40%. Elasticity 1: unit elastic; revenue $24 both times, change $0.
$10 and 100 units to $12 and 70 units. % change in quantity = −30 ÷ 85 = −35.29%; % change in price = 2 ÷ 11 = 18.18%. Elasticity = 35.29 ÷ 18.18 = 1.94 (signed −1.94): elastic. Revenue goes from $1,000 to $840, −$160.
$5 to $6 with 50 units both times. The quantity does not change, so the elasticity is 0: perfectly inelastic; revenue rises by $50.
Other questions people ask
What is the price elasticity of demand?
How strongly the quantity buyers want responds to a change in price: the percent change in quantity divided by the percent change in price. An elasticity of 0.45 means a 1% price change moves quantity by about 0.45% the other way.
What is the midpoint method?
Each percent change is measured against the average of the two values, not the starting one: (new − old) ÷ ((new + old) ÷ 2) × 100. So a move from A to B gives the same elasticity as a move from B to A.
How do I calculate it with the midpoint formula?
From $70 and 2,800 units to $60 and 3,000 units: % change in quantity = 200 ÷ 2,900 = 6.9%; % change in price = −10 ÷ 65 = −15.4%. The elasticity is 6.9 ÷ 15.4 = 0.45 (OpenStax Principles of Economics, section 5.1).
What do elastic and inelastic mean?
Elastic demand (above 1) responds strongly: quantity changes by a larger percent than price. Inelastic demand (below 1) responds weakly. At exactly 1 it is unit elastic, and at 0 perfectly inelastic: quantity does not change at all.
Why is the answer shown without a minus sign?
Price and quantity demanded usually move in opposite directions, so the raw ratio is negative. Economists, OpenStax included, usually quote its absolute value. The signed value is shown too.
How does elasticity affect revenue?
With inelastic demand, a price cut lowers revenue (fewer extra sales than the cut costs): the $70 to $60 example drops revenue from $196,000 to $180,000. With elastic demand, a price cut raises revenue. At unit elasticity revenue stays the same.