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Finance • Price Elasticity of Demand Calculator

Price Elasticity of Demand Calculator

Calculate the price elasticity of demand (PED) from percentage changes in quantity demanded and price, and classify demand as elastic or inelastic.

Quantity Demanded
Price
Price Elasticity of Demand
-1.000
Classification
Unit Elastic
% Change (Qty / Price)
-20.0% / 20.0%
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Calculation Guide & Reference

Price Elasticity of Demand (PED) Mathematics

Price elasticity of demand calculator computes PED from percentage changes in quantity demanded and price, and classifies demand as elastic or inelastic.

Standardized Mathematical Formula
PED = %ΔQuantity Demanded ÷ %ΔPrice

Price elasticity of demand measures how sensitive quantity demanded is to a change in price. It's the ratio of the percentage change in quantity to the percentage change in price that caused it.

Variables:
%ΔQuantity:Percentage change in quantity demanded
%ΔPrice:Percentage change in price
How It Works (Step-by-Step)
  • 1Enter the original and new quantity demanded.
  • 2Enter the original and new price.
  • 3View the price elasticity of demand and its classification (elastic, inelastic, or unit elastic).
Real-World Numerical Example
Price Rises from $10 to $12

When price rises from $10 to $12, quantity demanded falls from 100 to 80 units.

•%ΔQuantity: (80−100)/100 × 100 = −20%.
•%ΔPrice: (12−10)/10 × 100 = 20%.
•PED: −20% ÷ 20% = −1.0.
Result: PED = −1.0, meaning this good has unit elastic demand at this price point.
Calculation Best Practices & Tips
Distinguish between Nominal Interest Rate (APR) and Effective Annual Yield (APY) when comparing loans or investments.
Small additional monthly principal payments on mortgages can dramatically shorten amortization schedules and save tens of thousands in cumulative interest.
Factor in inflation when forecasting long-term investment purchasing power over 10-30 year time horizons.

Frequently Asked Questions (FAQ)

Elastic demand (|PED| > 1) means quantity demanded changes by a larger percentage than the price change that caused it — consumers are highly sensitive to price changes, common for luxury goods or goods with many substitutes.

Inelastic demand (|PED| < 1) means quantity demanded changes by a smaller percentage than the price change — common for necessities or goods with few substitutes, like gasoline or prescription medication.

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