Demand change from elasticity

Example numbers — the price change is hypothetical and not tied to any actual tariff plan.

Electricity estimates

First-order · change in quantity −5%. If the price rises 10%, quantity goes from 1,000 to 950 and spending (price × quantity) rises 4.5%.

First-order · change in quantity−5% Inelastic

If the price rises 10%, quantity goes from 1,000 to 950 and spending (price × quantity) rises 4.5%.

0%● −5%■ −4.7%▲ −4.7%
MethodΔ quantityQ₁Δ spending
● First-orderThe guide’s definition (p.24): |ε| × price change−5%950+4.5%
■ MidpointSupplement — the midpoint formula (guide p.14) solved backwards−4.65%953.49+4.88%
▲ Constant elasticitySupplement — assuming demand Q = k·P^(−|ε|)−4.65%953.46+4.88%

The three methods differ by 0.35 percentage points. The bigger the price change, the more the answer depends on what the change is measured from.

The backward midpoint formula and the constant-elasticity curve are supplements outside the guide. Put the midpoint Q₁ and the two prices into the two-point elasticity tool and you get the same |ε| back.

Not in this calculation

  • Shifts of the demand curve itself (income, prices of substitutes) — only movement along it
  • Supply’s response and the new equilibrium price
  • Shortage and consumer surplus under a price cap — see the price ceiling tool
  • How a short-run response grows into a long-run one — compare two values only
  • Any real tariff plan or forecast of Korean demand — the price change is hypothetical

Using the example values

Tool: Renuary (CC BY 4.0) · Numbers are examples. Method and limits on the original page.