Calculating your price elasticity of demand is straightforward once you know the Price Elasticity of Demand formula and what each input means. This guide explains the method in plain language, walks through a manual calculation, and gives worked examples you can follow — then you can do it instantly with the Price Elasticity of Demand Calculator.
What is Price Elasticity of Demand?
The Price Elasticity of Demand calculation tells you your price elasticity of demand from a few simple inputs. The figure you are solving for here is the price elasticity of demand.
The Price Elasticity of Demand formula
The core formula is:
Price elasticity of demand = ((New quantity - Initial quantity) ÷ ((Initial quantity + New quantity) ÷ 2)) ÷ ((New price - Initial price) ÷ ((Initial price + New price) ÷ 2))Here is what each input means:
- Initial price — a money amount. Example: ₹10.
- Initial quantity — a number. Example: 100.
- New price — a money amount. Example: ₹12.
- New quantity — a number. Example: 80.
How to calculate it step by step
- Write down the initial price (for example, ₹10).
- Write down the initial quantity (for example, 100).
- Write down the new price (for example, ₹12).
- Write down the new quantity (for example, 80).
- Apply the formula above to get your price elasticity of demand.
- Double-check the result with the Price Elasticity of Demand Calculator.
Worked examples
Example 1
| Input / Output | Value |
|---|---|
| Initial price | ₹10 |
| Initial quantity | 100 |
| New price | ₹12 |
| New quantity | 80 |
| Price elasticity of demand | -1.222 |
With initial price of ₹10, initial quantity of 100, new price of ₹12 and new quantity of 80, the price elasticity of demand works out to -1.222.
Example 2
With initial price of ₹20, initial quantity of 100, new price of ₹12 and new quantity of 80, the price elasticity of demand works out to 0.444.
| Result | Value |
|---|---|
| Price elasticity of demand | 0.444 |
Example 3
With initial price of ₹5, initial quantity of 100, new price of ₹12 and new quantity of 80, the price elasticity of demand works out to -0.270.
| Result | Value |
|---|---|
| Price elasticity of demand | -0.270 |
Tips for an accurate result
- Keep your units consistent — mixing, say, months with years or grams with kilograms is the most common source of error.
- Round only at the very end. Rounding inputs early can shift the final answer noticeably.
- Re-run the numbers whenever an input changes, rather than estimating from an old result.
Prefer not to do the maths by hand? — the Price Elasticity of Demand Calculator does it instantly, for free, with the formula and a worked example built in.
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