Price Elasticity Calculator

How to use the price elasticity calculator

1. Choose demand or supply. Demand elasticity describes buyers: how much less they buy when the price rises. Supply elasticity describes sellers: how much more they offer.
2. Enter two points. The old price and the quantity at that price, then the new price and the new quantity.
3. Read the result. The large figure is the elasticity, a plain number with no units or percent sign. The cards show the two percentage changes, the revenue at each point (for demand) and the result of the simpler “old value as base” method for comparison.

The calculator opens on the textbook example from OpenStax’s Principles of Economics 3e, section 5.1: the price rises from $60 to $70 and the quantity demanded falls from 3,000 to 2,800. The elasticity is 0.45, so demand is inelastic over that range.

The midpoint formula

Price elasticity is a ratio of percentage changes:

The textbook computes each percentage change with the midpoint method, dividing the change by the average of the old and new values rather than by the old value:

For the default example:

• % change in quantity = (2,800 − 3,000) ÷ 2,900 × 100 ≈ −6.9%
• % change in price = (70 − 60) ÷ 65 × 100 ≈ 15.4%
• Elasticity = −6.9 ÷ 15.4 ≈ −0.45, reported as 0.45

Because price and quantity demanded move in opposite directions, demand elasticity comes out negative. The textbook reports it as an absolute value without the sign, as does the calculator; the signed value is on its own card.

Why the midpoint method

With the ordinary percentage formula, the answer depends on direction. A rise from $60 to $70 is a 16.7% increase, but a fall from $70 to $60 is a 14.3% decrease, so the same two points would give two different elasticities. Using the average as the base gives the same magnitude in both directions.

The “Simple % method” card shows what the old-value formula gives, so you can see the difference. For small changes the two are close; for large ones they diverge, which is why economics courses usually ask for the midpoint version.

Elastic, inelastic and unit elastic

The textbook’s second example, between points G and H on the same demand curve, moves the price from $120 to $130 and the quantity from 1,800 to 1,600. The percentage changes are −11.76% and 8.0%, so the elasticity is 1.47: elastic. The same straight-line demand curve is inelastic at low prices and elastic at high ones, which shows that elasticity is not the same as slope and changes along the curve.

Elasticity and revenue

Total revenue is price times quantity. Section 5.3 of the textbook explains how elasticity predicts what a price change does to it:

• Elastic demand: a price increase loses proportionally more sales, so revenue falls. Lowering the price raises revenue.
• Inelastic demand: a price increase loses proportionally fewer sales, so revenue rises.
• Unit elastic: a moderate price change leaves revenue about the same.

The revenue card checks this with your numbers. At $60 × 3,000, revenue is $180,000; at $70 × 2,800 it is $196,000, up $16,000, consistent with inelastic demand. In the G-to-H example, revenue falls from $216,000 to $208,000 as demand there is elastic.

Revenue isn’t profit. Selling fewer units can also lower costs, so a pricing decision also needs the cost side; the profit margin and break-even calculators help with that. Elasticity can also differ between customer groups, which is one reason businesses offer student or off-peak prices.

Price elasticity of supply

The same formula applies to sellers, using the quantity supplied. In the textbook’s apartment example, when rent rises from $650 to $700 a month, the number of units offered rises from 10,000 to 13,000. The percentage changes are about 26.1% and 7.4%, and the textbook’s elasticity of supply is 3.53 (the calculator shows 3.52 because it doesn’t round the percentages first). A 1% rise in rent goes with about a 3.5% increase in units offered, so supply is elastic. Supply elasticity is positive, because price and quantity supplied move together.

Reading the result carefully

An elasticity computed from two observations assumes that the price change caused the quantity change. In real sales data, other things move too: season, advertising, competitors’ prices, income. If those changed between your two points, the number mixes their effects with the price effect. It also describes only the stretch of the curve between your two points; a much larger price change could meet a different response. Treat the figure as an estimate for that range, and recheck it when you have data from a new price.

What makes demand more or less elastic

Economists point to a few broad factors. Demand tends to be more elastic when:

• Close substitutes exist. If one brand of cereal costs more, many buyers switch to another.
• The item takes a large share of the budget. A 10% rise in rent is felt more than a 10% rise in the price of salt.
• Buyers have time to adjust. Responses to a fuel-price rise are larger after a few years, when people can change cars or commutes, than after a few weeks.
• The item is a want rather than a need. Demand for necessities with no good substitutes, such as many medicines, tends to be inelastic.

On the supply side, elasticity depends mostly on how quickly producers can change output: supply of apartments in a city can respond only as fast as buildings go up.

A quick small-business example

Suppose a coffee cart raises the price of a latte from $4.50 to $5.00 and daily sales drop from 220 to 190 cups. The midpoint changes are (190 − 220) ÷ 205 ≈ −14.6% for quantity and 0.50 ÷ 4.75 ≈ 10.5% for price, an elasticity of about 1.39: elastic. Revenue fell from $990 to $950 a day. Enter the four numbers to check, and remember that other changes over the same days, such as weather, affect the result too. A cleaner test compares similar days, such as the same weekday in consecutive weeks, and keeps everything else the same.

Sources & assumptions

How this calculator gets its numbers. Full method: our methodology.

• Midpoint method: % change = (new − old) ÷ ((new + old) ÷ 2) × 100, for both quantity and price.
• Elasticity = % change in quantity ÷ % change in price; demand elasticity is reported as an absolute value.
• Above 1 is elastic, below 1 inelastic, exactly 1 unit elastic. Revenue = price × quantity.

Sources

1. OpenStax (Rice University), Principles of Economics 3e, 5.1 Price Elasticity of Demand and Price Elasticity of Supply. The midpoint method; elastic, inelastic and unitary; worked values 0.45, 1.47 and 3.53.
2. OpenStax (Rice University), Principles of Economics 3e, 5.3 Elasticity and Pricing. How elasticity determines whether a price change raises or lowers total revenue.

Last reviewed November 2, 2026. Elasticity measured between two points describes that stretch of the curve only.