Price Elasticity of Demand Calculator

Calculate the Price Elasticity of Demand (PED) using initial and final prices and quantities.

The Price Elasticity of Demand (PED) Calculator is an essential tool for businesses and economists. It measures how changes in price affect the demand for a product. PED helps assess consumer behavior, optimize pricing strategies, and make informed business decisions.

A high elasticity means consumers are sensitive to price changes, while a low elasticity indicates demand remains steady despite price shifts. Understanding PED is vital for managing supply, maximizing profits, and predicting market trends.

How to Calculate PED

The calculation compares percentage changes in quantity and price:

Determine changes in quantity and price.
Divide the percentage change in quantity by the percentage change in price.

Formula for Price Elasticity of Demand

\text{PED} = \frac{\left( Q_1 – Q_0 \right) / \left( Q_1 + Q_0 \right)}{\left( P_1 – P_0 \right) / \left( P_1 + P_0 \right)}

Variables in the Formula

More Calculators

Variable	Description
Q₀	Initial quantity demanded.
Q₁	Final quantity demanded.
P₀	Initial price of the product.
P₁	Final price of the product.

Solved Calculations

Example 1

Step	Calculation
Initial Price (P₀)	$10
Final Price (P₁)	$12
Initial Quantity (Q₀)	100
Final Quantity (Q₁)	90
Formula	$\text{PED} = \frac{(90 – 100) / (90 + 100)}{(12 – 10) / (12 + 10$
Step 1: Quantity Change	$(90 – 100) / (90 + 10$
Step 2: Price Change	$(12 – 10) / (12 +$
Step 3: PED	$-0.0526 / 0.1$
PED	-0.526 (Inelastic demand)

Example 2

Step	Calculation
Initial Price (P₀)	$20
Final Price (P₁)	$18
Initial Quantity (Q₀)	150
Final Quantity (Q₁)	180
Formula	$\text{PED} = \frac{(180 – 150) / (180 + 150)}{(18 – 20) / (18 +$
Step 1: Quantity Change	$(180 – 150) / (180 +$
Step 2: Price Change	$(18 – 20) / (18 + 20$
Step 3: PED	$0.1 / -0.055$
PED	-1.8 (Elastic demand)

Price Elasticity of Demand Calculator