Price Elasticity of Demand Calculator
Calculate the price elasticity of demand from changes in price and quantity, and classify demand as elastic, inelastic or unit elastic.
Last reviewed by the Radiatus Cloud team
Calculate price elasticity of demand to see how sensitive sales are to price changes.
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Calculate price elasticity of demand
Price elasticity of demand, or PED, measures how much the quantity demanded of a product responds to a change in its price. It is calculated by dividing the percentage change in quantity demanded by the percentage change in price. The result is usually negative, because demand normally falls as price rises, so economists focus on its absolute value. If the absolute value is greater than one, demand is elastic and sensitive to price; if it is less than one, demand is inelastic and relatively unresponsive; and a value of exactly one is unit elastic.
This calculator computes the elasticity from your before-and-after price and quantity figures and classifies the result.
Why elasticity guides pricing
Understanding elasticity is central to pricing strategy. For inelastic products, raising the price increases total revenue because quantity falls only slightly, while for elastic products a price rise can reduce revenue as customers buy much less. Necessities and products with few substitutes tend to be inelastic, whereas luxuries and products with many alternatives tend to be elastic.
This calculation uses the simple point method based on the original values; economists sometimes use the midpoint method for a symmetric result. Treat the figure as a guide, since real demand depends on many factors. All calculation happens locally in your browser.
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Frequently Asked Questions
What is price elasticity of demand?
It is the percentage change in quantity demanded divided by the percentage change in price, measuring how sensitive demand is to price.
What does elastic versus inelastic mean?
An absolute elasticity above one is elastic, meaning demand reacts strongly to price. Below one is inelastic, meaning demand barely changes.
Why is the result usually negative?
Because demand normally falls when price rises, the two changes have opposite signs. Economists use the absolute value to classify elasticity.
How does elasticity affect revenue?
For inelastic goods, raising the price lifts revenue. For elastic goods, raising the price can reduce revenue as customers buy far less.
What makes demand elastic?
Many available substitutes, discretionary purchases and a large share of income tend to make demand more elastic and price-sensitive.
Privacy & Security
Everything runs in your browser; nothing is uploaded.
How to Use
Enter the original and new price and quantity.
Disclaimer: This tool is provided "as is" without warranty of any kind. Results are for educational and utility purposes.
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