Price Elasticity of Demand Calculator
Calculate Price Elasticity of Demand (PED) using the midpoint arc formula. Determine elasticity category and revenue impact.
Interactive Calculator
1. Provide Details
$
$
units
units
2. Output Results
Price Elasticity Coefficient (PED)-1.22
Demand ClassificationElastic Demand (|PED| > 1 - Price Sensitive)
Net Revenue Impact-$40.00 $
How to Calculate: Formula & Steps
Applies the standard midpoint arc elasticity formula to avoid direction bias between initial and final price-quantity points.
Formula Used:
PED = [ (Q2 - Q1) / ((Q1 + Q2)/2) ] ÷ [ (P2 - P1) / ((P1 + P2)/2) ]Step-by-Step Calculation Example
If price increases from $10 to $12 (+18.2%) and sales drop from 100 to 80 units (-22.2%), PED is -1.22 (Elastic demand, total revenue decreases).
Common Mistakes to Avoid
- Confusing percentage change with absolute unit changes when analyzing price increases.
Practical Use Cases
- E-commerce product pricing strategy
- Economics coursework and business revenue optimization
Expert Tips
- For inelastic goods (|PED| < 1), raising prices increases total gross revenue.
Frequently Asked Questions About Price Elasticity of Demand Calculator
What does a PED greater than 1 mean?
A PED absolute value > 1 indicates Elastic demand, meaning consumers are very sensitive to price changes.
You May Like
Construction & Landscaping
How Much Topsoil Do I Need? A Complete Landscaping Guide
Construction & Landscaping
Fill Dirt vs. Topsoil: Differences, Uses & When to Use Which
Construction & Landscaping
Topsoil Cost Guide: Price Per Cubic Yard, Delivery, and Bags
Construction & Landscaping