What this calculator does
Price elasticity of demand measures how sharply the quantity people buy responds to a change in price. This calculator applies the standard price elasticity of demand formula: the percentage change in quantity demanded divided by the percentage change in price, from an original and a new price and quantity.
The result is a single number that says more than "demand went up" or "demand went down". A large elasticity means buyers are highly sensitive to price, cutting back sharply on a small price rise. A small elasticity means demand barely moves even when price changes noticeably, which is typical of goods with few substitutes.
The formula
The percentage change in quantity demanded and the percentage change in price are each calculated against their original values. Dividing the first by the second gives the elasticity. Because demand usually falls as price rises, the result is normally negative; only its size, ignoring the sign, decides whether demand is elastic or inelastic.
| Term | Meaning |
|---|---|
| % change in quantity demanded | (new quantity − original quantity) ÷ original quantity × 100. |
| % change in price | (new price − original price) ÷ original price × 100. |
| Elastic demand | The size of the elasticity is greater than 1: quantity demanded changes by a larger percentage than price did. |
| Inelastic demand | The size of the elasticity is less than 1: quantity demanded changes by a smaller percentage than price did. |
| Unit elastic | The size of the elasticity is exactly 1: the percentage change in quantity matches the percentage change in price. |
The inputs explained
| Field | What to enter |
|---|---|
| Original price ($) | The price before the change. |
| New price ($) | The price after the change. Must be different from the original price. |
| Original quantity demanded | The quantity demanded at the original price. |
| New quantity demanded | The quantity demanded at the new price. |
When to use it
Deciding whether a price rise will grow or shrink revenue
If demand is elastic, a price rise loses more in quantity sold than it gains per unit, cutting total revenue. If demand is inelastic, the opposite holds and revenue rises, which is why the elasticity figure matters more to a pricing decision than the price change alone.
Comparing how price-sensitive different products are
Running the same price and quantity change through this calculator for two different products shows which one has more price-sensitive customers, useful when deciding where a discount or price rise will have the biggest effect.
Studying or checking an economics problem
This is the direct calculation behind the standard price elasticity of demand formula taught in introductory economics, useful for checking worked examples or homework answers.
Worked examples
Every figure in the tables below is produced by this page’s own calculator at build time, so the numbers and the tool always agree. Select any row to load that scenario.
How elasticity changes as the quantity response gets larger
The same 20% price rise, from $10 to $12, against a range of resulting quantities demanded.
| New quantity demanded | Price elasticity of demand | % change in quantity demanded | Classification |
|---|---|---|---|
| 100 | 0.000 | 0.000% | Inelastic: quantity demanded responds less than proportionally to price |
| 90 | -0.500 | -10.0% | Inelastic: quantity demanded responds less than proportionally to price |
| 80 | -1.000 | -20.0% | Unit elastic: quantity demanded responds exactly proportionally to price |
| 60 | -2.000 | -40.0% | Elastic: quantity demanded responds more than proportionally to price |
| 40 | -3.000 | -60.0% | Elastic: quantity demanded responds more than proportionally to price |
Questions
Why is price elasticity of demand usually a negative number?
Because price and quantity demanded normally move in opposite directions: when price rises, quantity demanded typically falls, and when price falls, quantity demanded typically rises. The negative sign reflects that inverse relationship; economists usually discuss only its size.
What does an elasticity of exactly 1 mean?
It means demand is unit elastic: the percentage change in quantity demanded exactly matches the percentage change in price. Total revenue, price times quantity, stays unchanged at this point, which makes it a useful reference case.
What kinds of goods tend to have inelastic demand?
Goods with few substitutes and goods people consider necessities, such as petrol, prescription medicine or basic groceries, since buyers keep purchasing them even as price rises, at least within a normal range.
How is this different from the deadweight loss or consumer surplus calculators on this site?
Price elasticity of demand measures how responsive quantity is to price alone. Consumer surplus and deadweight loss instead measure the value gained or lost by buyers and the wider market from a specific price or quantity change, related concepts that build on elasticity rather than measuring the same thing.
For the value buyers gain from paying less than they were willing to, see the consumer surplus calculator. For the wider loss to the market from a price or quantity restriction, see the deadweight loss calculator.