Pricing
Arc elasticity
Both changes measured against the midpoint, so direction does not matter.
The Formula
E = ((Q2 - Q1) / midpoint Q) / ((P2 - P1) / midpoint P)
Both changes measured against the midpoint, so direction does not matter.
| Symbol | Meaning | Unit | Notes |
|---|---|---|---|
| Qbar | Midpoint quantity | units | The average of the two quantities. |
| Pbar | Midpoint price | currency per unit | The average of the two prices. |
What Each Symbol Means
Qbarunits
Midpoint quantity
The average of the two quantities.
Pbarcurrency per unit
Midpoint price
The average of the two prices.
See It Worked With Real Numbers
A formula on its own does not tell you which number goes where. The how to calculate price elasticity of demand page applies this equation to a concrete case, shows every intermediate step, and names the mistakes that produce a wrong answer even when the algebra is right.
Where This Formula Appears
This equation is the working core of How To Calculate Price Elasticity Of Demand, filed under Business. Every number the guide produces comes from substituting into this one line.