Result
Demand elasticity
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This calculation is for informational purposes only and does not replace advice from a qualified professional. Formulas and rates may not fit your exact situation — double-check the figures before making decisions.
How it is calculated
Elasticity = (% change in quantity) ÷ (% change in price), where both percentages use the midpoint method (arc elasticity): % change = (value after − value before) ÷ average of before and after. This method gives the same result regardless of the direction of the change — from point 1 to point 2 or the reverse — unlike a simple percentage change off the starting value.
A negative elasticity value is normal for most goods (the law of demand: price up, quantity down). If the absolute value of elasticity is above 1, demand is called elastic (quantity reacts more than price); below 1, it's inelastic (quantity reacts less than price).
Demand elasticity is a standard input for computing an optimal price: knowing its value and marginal cost, a profit-maximizing price can be derived — use the separate optimal price by demand elasticity calculator for that.