Elasticity Calculator

Elasticity measures how strongly one quantity responds to a change in another. This calculator covers the three you meet in an introductory economics course - price elasticity of demand, income elasticity and cross elasticity - using the midpoint method, and interprets each result rather than leaving you with a bare number.

Frequently asked questions

Why use the midpoint method?

Because the simple percentage-change formula gives a different answer depending on which point you start from. The midpoint method divides by the average of the two values, so moving from A to B and from B to A give the same elasticity.

What counts as elastic demand?

An absolute value above 1 means demand is elastic: quantity moves proportionally more than price, so a price rise reduces total revenue. Below 1 is inelastic, and a price rise increases revenue. Exactly 1 is unit elastic and revenue is unchanged.

What does a negative cross elasticity mean?

The two goods are complements - printers and ink, for example - so a price rise for one reduces demand for the other. A positive value means they are substitutes, like two competing brands of coffee.

Related tools