Price Elasticity

Price Elasticity Calculation:

Price Elasticity:

Elasticity = (Demand Change %) / (Price Change %)

Change Percentages:

Price Change % = ((Final Price - Initial Price) / Initial Price) × 100
Demand Change % = ((Final Demand - Initial Demand) / Initial Demand) × 100

Income Change

Initial Income = Initial Price × Initial Demand
Final Income = Final Price × Final Demand
Income Change % = ((Final Income - Initial Income) / Initial Income) × 100

Example:

Initial Price: $ 100, Final Price: $ 120

Initial Demand: 1000, Final Demand: 800

Price Change % = ((120 - 100) / 100) × 100 = 20 %
Demand Change % = ((800 - 1000) / 1000) × 100 = -20 %
Elasticity = |-20 / 20| = 1.0 (Unit Elastic)