The standard microeconomics metric measuring how sensitive the quantity demanded is to a change in price.
How it works
The percentage change in quantity demanded is divided by the percentage change in price.
What this does not include
This does not include cross-price elasticity or income elasticity, related but distinct economic measures involving a different pair of variables.
How to use this calculator
- Enter the original and new price, and the original and new quantity demanded.
A worked example
Price rises from $10 to $12 (20% increase) while quantity falls from 100 to 80 (20% decrease): elasticity = −20%/20% = −1 — unit elastic, where demand falls proportionally to the price increase.
Price rises from $10 to $11 (10%) while quantity falls from 100 to 70 (30%): elasticity = −3 — highly elastic, where demand is far more sensitive to price than the price change itself.
What the variables mean
| Variable | Meaning |
|---|---|
| Price 1, Price 2 | Starting and ending price |
| Quantity 1, Quantity 2 | Starting and ending quantity demanded |
Edge cases worth knowing
Elasticity is negative for normal goods — price and quantity demanded typically move in opposite directions, so a negative result is expected, not a sign of error.
A value further from zero means more elastic demand — the second example’s −3 shows demand collapsing much faster than price rose, unlike the first example’s −1, where they moved in lockstep.
Frequently asked questions
What does an elasticity greater than 1 mean?
Demand is “elastic” — quantity demanded changes proportionally more than the price change, meaning buyers are quite sensitive to price.
What does an elasticity less than 1 mean?
Demand is “inelastic” — quantity demanded changes proportionally less than the price change, meaning buyers are relatively insensitive to price.
Why is elasticity usually a negative number?
Because price and quantity demanded typically move in opposite directions (price up, quantity down), the ratio of their percentage changes comes out negative for most goods.
