Price / Quantity Calculator

Enter an initial price and quantity plus a new price and quantity to calculate the price elasticity of demand, the percent change in each variable, and the resulting shift in total revenue.

Quick Facts

Formula
PED = %ΔQ / %ΔP (midpoint method)
Percent changes are measured against the average of the old and new values, so the result is the same whether price rises or falls between the two points.
Classification
|PED| > 1 elastic, < 1 inelastic, = 1 unit elastic
Elastic demand means total revenue moves opposite to price; inelastic demand means revenue moves with price.

Your Results

Calculated
Price elasticity of demand
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|%ΔQ / %ΔP|, midpoint method
% change in quantity
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Midpoint method
% change in price
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Midpoint method
Total revenue change
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New price × quantity minus initial price × quantity

Ready

Enter an initial and new price/quantity pair, then press Calculate.

How the Price / Quantity Calculator works

This tool measures how sensitive quantity demanded is to a change in price — the standard economics concept of price elasticity of demand (PED) — and shows what that shift does to total revenue. Give it a starting price/quantity pair and a new price/quantity pair; it does the rest.

The formula

The calculator uses the midpoint (arc elasticity) method, the standard approach for computing elasticity between two known points:

%ΔQ = (Q₂ − Q₁) / [(Q₁ + Q₂) / 2] × 100
%ΔP = (P₂ − P₁) / [(P₁ + P₂) / 2] × 100
PED = %ΔQ / %ΔP

Dividing by the average of the two values (rather than just the starting value) means the result is identical in magnitude whether you move from the lower price to the higher one or the reverse — a property the simpler "percent change from the original" method does not have.

Worked example

Take a price that rises from $10 to $12 while quantity demanded falls from 1,000 to 850 units. The percent change in quantity is (850 − 1000) / 925 × 100 ≈ −16.2%. The percent change in price is (12 − 10) / 11 × 100 ≈ 18.2%. Dividing gives PED ≈ −0.89, so |PED| ≈ 0.89 — just under 1, meaning demand is close to unit elastic but slightly inelastic over this range. Total revenue moves from $10,000 (10 × 1,000) to $10,200 (12 × 850), a small increase, consistent with inelastic demand near unity.

Reading the elasticity classification

  • |PED| > 1 (elastic): quantity demanded is proportionally more responsive than price. Raising price lowers total revenue because the volume drop outweighs the higher unit price.
  • |PED| < 1 (inelastic): quantity demanded is proportionally less responsive than price. Raising price raises total revenue because volume falls by a smaller percentage than price rises.
  • |PED| ≈ 1 (unit elastic): the percentage changes roughly offset, so total revenue is approximately unchanged by the price move.

Assumptions and limits

This is a two-point elasticity calculation: it describes the relationship implied by the specific price and quantity pair you enter, not a full demand curve. It assumes no other factor (income, substitute prices, seasonality, marketing) changed between the two observations. Elasticity computed over a wide price range is a rough average across that range rather than the elasticity at any single point. This is a computational tool, not financial or business advice.

Frequently Asked Questions

What formula does this calculator use?
It uses the midpoint (arc) method for price elasticity of demand: PED = (%change in quantity) / (%change in price), where each percent change is computed against the average of the old and new values rather than just the starting value. This makes the result the same size whether price moves up or down between the same two points, which the simple percent-change method does not guarantee.
How do I read the elasticity number?
Elasticity is normally negative because price and quantity demanded usually move in opposite directions; the calculator reports the absolute value for classification. A value above 1 means demand is elastic (quantity is relatively sensitive to price), below 1 means inelastic (quantity is relatively insensitive), and a value at or near 1 means unit elastic.
Why does total revenue matter alongside elasticity?
Total revenue equals price multiplied by quantity, and its direction after a price change is a direct check on the elasticity classification. When demand is elastic, raising price lowers total revenue because the drop in quantity outweighs the higher price per unit. When demand is inelastic, raising price raises total revenue because quantity falls proportionally less than price rises.
What if the new price equals the initial price?
The formula divides by the percent change in price, so if the two prices are identical that term is zero and elasticity is undefined. Enter two different price points to get a meaningful result.

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