Price elasticity — midpoint formula

Example numbers — estimates for electricity demand vary by study. This tool only works the formula between two points.

Before
After
Arc elasticity (midpoint) |E|0.58 Inelastic

Quantity changes less than the price.

PQ →beforeafter
Change in quantity-10.5%(45 − 50) ÷ 47.5
Change in price+18.2%(120 − 100) ÷ 110
|E|0.58|-10.5% ÷ 18.2%|
Price × quantity5,000 → 5,400up

Not in this calculation

  • How the response changes over time — short run and long run
  • Changes in income or in other prices
  • Elasticity at a single point — that needs the shape of the curve
  • Actual elasticities of electricity demand — the defaults are example numbers
Reading |E|
0Perfectly inelasticQuantity does not change when the price does.
0 ~ 1InelasticQuantity changes less than the price.
1Unit elasticQuantity changes in the same proportion as the price.
> 1ElasticQuantity changes more than the price.
∞Perfectly elasticQuantity changed while the price stayed the same.

Using the example values

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