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# Price Elasticity of Demand Calculator

Use our simple price elasticity of demand calculator to determine the elasticity of demand given the initial and final quantities demanded and price.
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Quantity demanded
Price change

Elasticity of demand
-0.733
Demand is inelastic
The percentage change in the quantity demanded is less than the percentage change in price.
Quantity demanded
66.67%
Percentage change
Price
-90.91%
Percentage change
 Initial revenue $400 Final revenue$300 Percentage change in revenue -25%
How to calculate the price elasticity of demand

The formula for the price elasticity of demand is:

Price elasticity of demand
= Percentage change in quantity demanded Ã· Percentage change in price

where:

Percentage change in quantity demanded
= (Final quantity â Initial quantity) Ã· ((Final quantity + Initial quantity) Ã· 2)
= (Final quantity â Initial quantity) Ã· Average quantity

Percentage change in price
= (Final price â Initial price) Ã· ((Final price + Initial price) Ã· 2)
= (Final price â Initial price) Ã· Average price

Using this formula, we can calculate the price elasticity of demand.

Percentage change in quantity demanded
= (Final quantity â Initial quantity) Ã· ((Final quantity + Initial quantity) Ã· 2)
= (100 â 50) Ã· ((100 + 50) Ã· 2)
= 66.67%

Percentage change in price
= (Final price â Initial price) Ã· ((Final price + Initial price) Ã· 2)
= ($3 â$8) Ã· (($3 +$8) Ã· 2)
= -90.91%

Price elasticity of demand
= Percentage change in quantity demanded Ã· Percentage change in price
= 66.67% Ã· -90.91%
= -0.733

## What is price elasticity of demand?

The price elasticity of demand measures how responsive is the quantity demanded of a good or service to a change in its price.

Definition

Price elasticity of demand: To what extent does the quantity demanded of a good changes in response to a change in its price.

For example, a coffee shop knows that if it raises the price of an ice coffee then the quantity of coffee sold will decrease. How much will it decrease? This depends on how much the quantity demanded responds to a change in price. The price elasticity of ice coffee determines this.

## Price elasticity of demand formula

The price elasticity of demand formula compares the percentage change in quantity demanded to the percentage change in price.

where:

You might notice that the calculation of percentage change does not use the initial price or quantity as the base, but rather the average of the initial and finance price or quantity. This is known as the Midpoint Method and its purpose is to adjust for rises and falls in prices.

Letâs say that a coffee shop raises the price of an ice coffee from $4 to$6. The percentage change is calculated by the following formula.
Now, imagine that the coffee shop lowers the price of an ice coffee from $6 to$4. The percentage change would be: