Price Elasticity of Demand Calculator (Midpoint Method)
Enter the old and new price and the quantity sold at each.
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Price Elasticity of Demand Calculator (Midpoint Method) by TheCalcTools
How the Price Elasticity of Demand Calculator (Midpoint Method) works
Elasticity is the percentage change in quantity divided by the percentage change in price. The midpoint method uses averages as the base, so the answer is the same whether the price rises or falls.
If demand is inelastic (|E| < 1), raising prices increases revenue; if elastic (|E| > 1), it lowers revenue.
The formula
Worked example
Using the default values shown in the calculator:
| Original price | $20 |
|---|---|
| New price | $24 |
| Quantity at the original price | 1000 |
| Quantity at the new price | 850 |
- Price up from 20 to 24, sales down from 1,000 to 850: E = -0.892.
- Inelastic: quantity responds weakly; revenue changes by $400.
Result:
| Price elasticity of demand | -0.892 |
|---|---|
| Demand is | Inelastic: quantity responds weakly |
| Revenue before | $20,000 |
| Revenue after | $20,400 |
| Revenue change | $400 |
Frequently asked questions
Why is elasticity usually negative?
Demand normally falls when price rises. People often quote the absolute value.
Sources and further reading
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