Pricing
Elasticity from two points
Each change measured against its own starting value.
The Formula
E = ((Q2 - Q1) / Q1) / ((P2 - P1) / P1)
Each change measured against its own starting value.
| Symbol | Meaning | Unit | Notes |
|---|---|---|---|
| Q1 | Quantity before | units | Units sold at the original price. |
| Q2 | Quantity after | units | Units sold at the new price. |
| P1 | Price before | currency per unit | The original price. |
| P2 | Price after | currency per unit | The new price. |
What Each Symbol Means
Q1units
Quantity before
Units sold at the original price.
Q2units
Quantity after
Units sold at the new price.
P1currency per unit
Price before
The original price.
P2currency per unit
Price after
The new price.
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.