Price Elasticity of Demand Calculator
Calculate price elasticity of demand from old and new price/quantity data.
Determine if your product is elastic or inelastic.
Price Elasticity Result
Price Elasticity of Demand (PED) measures how sensitive demand is to price changes.
Midpoint method (most accurate):
PED = (% Change in Quantity) / (% Change in Price)
% Change in Qty = (Q2 - Q1) / ((Q2 + Q1) / 2) × 100
% Change in Price = (P2 - P1) / ((P2 + P1) / 2) × 100
Interpreting the coefficient: | |PED| Value | Type | Meaning | |————|——|———| | |PED| > 1 | Elastic | Demand is sensitive to price changes | | |PED| = 1 | Unit elastic | Proportional change | | |PED| < 1 | Inelastic | Demand is not very sensitive to price |
Practical implications:
- Elastic (|PED| > 1): Lowering price increases total revenue
- Inelastic (|PED| < 1): Raising price increases total revenue
- Unit elastic (|PED| = 1): Revenue stays the same regardless of price change
Examples:
- Gasoline: ~0.3 (inelastic — people still need to drive)
- Restaurant meals: ~1.6 (elastic — easy to cook at home)
- Luxury goods: >2.0 (highly elastic)