Price Elasticity of Demand
Price elasticity of demand is the percentage change in quantity divided by the percentage change in price, taken as an absolute value. Above 1 is elastic (price-sensitive); below 1 is inelastic.
Your numbers
Price elasticity
2×
What it means
An elasticity of 2 is elastic. Cutting price would grow revenue.
Formula
Price elasticity = |Quantity change ÷ Price change|
Necessities tend to be inelastic; goods with easy substitutes tend to be elastic. This is a local approximation for one price move, not a constant across all price levels.
What to enter
| Input | Default | Accepted range |
|---|---|---|
| Quantity change (%)How much the quantity demanded shifted, in percent. | -10 | -99 ~ 500 |
| Price change (%)How much the price rose or fell, in percent. | 5 | -99 ~ 500 |
Step by step
Quick reference table
Results when only Price change (%) changes and everything else stays put.
| Price change (%) | Price elasticity (×) |
|---|---|
| 2.5 | 4 |
| 3.75 | 2.67 |
| 5 | 2 |
| 7.5 | 1.33 |
| 10 | 1 |
What each result means
| Result | At default values |
|---|---|
| Price elasticity (×)Quantity change divided by price change, as an absolute value; above 1 is price-sensitive. | 2 |
Common mistakes
Necessities tend to be inelastic; goods with easy substitutes tend to be elastic. This is a local approximation for one price move, not a constant across all price levels.
Glossary
- Quantity change
- How much the quantity demanded shifted, in percent.
- Price change
- How much the price rose or fell, in percent.
- Price elasticity
- Quantity change divided by price change, as an absolute value; above 1 is price-sensitive.
Frequently asked questions
QHow is Price Elasticity of Demand calculated?
Price elasticity = |Quantity change ÷ Price change| — Price elasticity of demand is the percentage change in quantity divided by the percentage change in price, taken as an absolute value. Above 1 is elastic (price-sensitive); below 1 is inelastic.
QCan you walk through an example?
With Quantity change -10%, Price change 5%, the answer is Price elasticity 2×.
QWhat do I need to enter?
Enter Quantity change, Price change. The result recalculates as you type, and an empty box counts as zero.
QHow much does the answer move if I change a number?
Changing only Price change (%) moves the answer to Price change (%) 2.5 → Price elasticity (×) 4 and Price change (%) 10 → Price elasticity (×) 1. The table below lays out five steps.
QHow are the numbers rounded?
Money is shown to the nearest whole unit, percentages to one decimal place and everything else to two. What you see is rounded; the calculation itself carries the unrounded value forward.
QAnything to watch out for?
Necessities tend to be inelastic; goods with easy substitutes tend to be elastic. This is a local approximation for one price move, not a constant across all price levels.
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