Price Elasticity of Demand Calculator
Measure how responsive consumer demand is to a price change — enter the before and after price and quantity demanded to get the elasticity coefficient, its economic classification and the total revenue impact.
Unit elastic
- 1
% change in price
(12 − 10) ÷ 10 × 100 = 20 % - 2
% change in quantity demanded
(80 − 100) ÷ 100 × 100 = -20 % - 3
Price Elasticity of Demand
-20 % ÷ 20 % = -1Negative sign reflects the inverse relationship between price and quantity demanded.
How does this calculator work?
PED = ((Q₂−Q₁)/Q₁) ÷ ((P₂−P₁)/P₁). If price rises 20% and quantity demanded falls 10%, PED = −0.5 (inelastic). |PED| > 1 is elastic; |PED| < 1 is inelastic; = 1 is unit elastic. Elastic demand means raising prices cuts revenue; inelastic means it raises it.
Formula
How this is calculated
Price elasticity of demand (PED) quantifies how much the quantity demanded of a good changes in response to a price change. It is calculated as the percentage change in quantity demanded divided by the percentage change in price — both expressed relative to the initial (base) values, which is the point elasticity method. Because demand typically falls when price rises (the law of demand), PED is usually negative for normal goods; the sign is often dropped and the absolute value used for classification.
The absolute value |PED| determines the demand category: |PED| > 1 is elastic — quantity falls proportionally more than price rises, so revenue falls when you raise prices; |PED| < 1 is inelastic — quantity falls proportionally less, so revenue rises with a price increase; |PED| = 1 is unit elastic — revenue is unchanged. Perfectly inelastic demand (|PED| = 0) means quantity never changes; perfectly elastic (|PED| → ∞) means any price increase drives quantity to zero.
This calculator uses the simple point-elasticity formula and is most accurate for small price changes. For large swings the midpoint (arc) formula — which averages both price and quantity — is less sensitive to which data point is treated as the base. The linear demand curve drawn through your two data points is an approximation; real demand curves are generally non-linear and depend on substitutes, income levels, consumer preferences and time horizon.
Frequently asked questions
Because price and quantity demanded move in opposite directions for normal goods (the law of demand): when price rises, quantity demanded falls. The negative sign captures this inverse relationship. Economists often report |PED| for classification.
Key factors: availability of substitutes (more substitutes → more elastic), necessity vs luxury (necessities tend to be inelastic), proportion of income spent (high-cost items tend to be elastic), and time horizon (demand becomes more elastic over time as consumers adjust). Addictive goods are among the most inelastic.
If |PED| > 1 (elastic), raising price reduces total revenue (TR = P × Q drops because Q falls proportionally more). If |PED| < 1 (inelastic), raising price increases TR. At unit elasticity TR is maximised. This is the basis of optimal pricing strategy.
Also known as
TG we-Calculate Editorial Team. (2026). Price Elasticity of Demand Calculator [Online calculator]. TG we-Calculate. https://we-calculate.com/calculator/price-elasticity-demand-calculator
TG we-Calculate Editorial Team. "Price Elasticity of Demand Calculator." TG we-Calculate. 2026. https://we-calculate.com/calculator/price-elasticity-demand-calculator.
TG we-Calculate Editorial Team, "Price Elasticity of Demand Calculator," TG we-Calculate, 2026. [Online]. Available: https://we-calculate.com/calculator/price-elasticity-demand-calculator
@misc{wecalculate_price_elasticity_demand_calculator, title = {Price Elasticity of Demand Calculator}, author = {{TG we-Calculate Editorial Team}}, howpublished = {\url{https://we-calculate.com/calculator/price-elasticity-demand-calculator}}, year = {2026}, note = {TG we-Calculate} }
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