Price Elasticity of Demand Calculator
Enter two price-quantity points. The calculator returns using either the midpoint (arc) formula or the point formula, and classifies the result as elastic, inelastic, or unit elastic.
One tile of the full elasticity unit.
The course teaches elasticity interactively — drag the graphs, practice with feedback, and spaced reviews bring it back before you forget. Free.
Initial point
New point
Elasticity of demand
Ed = -1.222
|Ed| = 1.222
|Ed| > 1. Quantity demanded responds more than proportionally to price. Revenue falls when price rises.
What the course adds
Beyond this one page
The elasticity unit teaches arc and point methods, then cross-price, income, and price elasticity of supply — each on interactive graphs, with practice that finds your weak spots.
Spaced reviews
FSRS brings every concept back right before you'd forget. ~50% better retention than re-reading.
Per-concept mastery
Performance Factor Analysis tracks each sub-skill separately — you see which version of the idea is still wobbly.
Diagnostic placement
A short test skips you past what you already know. No re-learning the basics.
The formula
Midpoint (arc):
Point:
The midpoint method is preferred for AP Microeconomics and most introductory courses because it gives the same magnitude regardless of the direction of the price change.
Worked example
Suppose the price of a coffee rises from 10 to 12 dollars and quantity demanded falls from 100 to 80 cups per day. Using the midpoint method:
→ Elastic
Because demand is elastic at these prices, raising the price from 10 to 12 would reduce total revenue. Before: . After: . Revenue fell.
FAQ
- What is the formula for price elasticity of demand?
- Price elasticity of demand () equals the percent change in quantity demanded divided by the percent change in price. The midpoint (arc) method uses averages of the two quantities and two prices in the denominators so the elasticity is the same whether price rises or falls. The point method computes the percent changes relative to a single base point.
- What is the midpoint (arc) elasticity formula?
- . It produces the same magnitude of elasticity regardless of whether you move from point 1 to point 2 or from point 2 to point 1, which is why it is preferred on AP Microeconomics free-response questions.
- What does the sign of the elasticity mean?
- For a typical downward-sloping demand curve, price and quantity move in opposite directions, so the computed elasticity is negative. Economists usually report the absolute value . A negative sign is expected — a positive elasticity would indicate a Giffen or Veblen good.
- How do I classify elasticity from the result?
- is elastic (demand responds more than proportionally). is inelastic (demand responds less than proportionally). is unit elastic. is perfectly inelastic (vertical demand). is perfectly elastic (horizontal demand).
- How does elasticity affect total revenue?
- When demand is elastic, raising the price reduces total revenue (the quantity lost outweighs the price gain). When demand is inelastic, raising the price increases total revenue. When demand is unit elastic, total revenue is unchanged by small price changes. This is why monopolists always choose a price in the elastic region of their demand curve.
For instructors
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Ready to go deeper than a calculator?
The full Econ Academy elasticity unit walks you through cross-price and income elasticity, determinants, and applications — with interactive graphs and spaced-repetition review.