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The team of calculator-online brings another efficient and reliable tool known as “price elasticity of demand calculator” that is using the simple price elasticity of demand formula. Yes, this elasticity calculator helps you to measure the PED within a couple of seconds.
Well, before knowing about this price elasticity of demand calculator, you should beware of with the term “PED.”
Let’s move ahead!
Price elasticity of demand (PED) is a type of economic measurement through which you come to know how the quantity of demand for a good will be affected by changes in its price. In simple words, PED is a way to determine the responsiveness of consumers to fluctuations in price.
More specifically, the price elasticity definition – it shows the relationship between price and quantity demanded and provides a precise/exact calculation concerning the effect of a change in price on quantity demanded.
These are the types of PED:
If the PED is greater than 1 (|PED| > 1), then the demand is said to be as elastic demand.
People often asked about what is unit elastic! Well, if the PED is equal to 1 (|PED| = 1), then the demand is known as unit elastic.
If the PED is less than 1 (|PED| < 1), then the demand is said to be as inelastic demand.
If the PED is equal to zero (|PED| = 0), then the demand is known as a perfectly inelastic.
If the PED is equal to infinity (|PED| = Infinity), then the demand is said to be as a perfectly elastic.
How to calculate PED is the most common question that frequently asked by many folks. The experts of calculator-online provided price elasticity of demand calculator to calculate the PED. Our efficient price elasticity calculator uses a simple price elasticity formula to determine how demand for goods/services may change in response to a change in the prices of those goods/services. Read on to know the working of this elasticity calculator!
Our price elasticity of demand calculator is very convenient to use; you just have to do the following:
The price elasticity of demand calculator is an advanced tool that assists in finding out the PED and change in aggregate revenue. So, utilize the above elasticity calculator to unfold the question of how to find PED.
You can calculate PED using simple price elasticity of demand formula; this formula is based on price which is derived by dividing the percentage change in quantity (∆Q/Q) by percentage change in price (∆P/P).
Price Elasticity Formula is represented mathematically as:
PED= (Percentage Change In Quantity (∆Q/Q) )/(Percentage Change In Price (∆P/P))
Furthermore, the price elasticity of demand equation can be elaborated into:
PED = ((Q1 – Q0)/ (Q1 + Q0))/((P1 – P0)/(P1 + P0))
P0 = Initial price and P1 = Final price, Q0 = Initial quantity, Q1 = Final quantity
Our elasticity of demand calculator also considers the above formula for calculating elasticity!
PED equation can be elaborated in the given steps:
PED = ((Q1 – Q0)/ (Q1 + Q0))/((P1 – P0)/(P1 + P0))
But, don’t to worry! There is a no need to do these complex mathematically calculation and even no need to remember these all formulas. You just have to initial price, new price, initial quantity, and new quantity in the above price elasticity of demand calculator and remaining will do by our calculator within seconds.
In fact, elastic goods and services generally have plenty of substitutes. Remember that as an elastic service/good’s price increases, the quantity of demanded good can drop fast. Many other examples of elastic goods are including:
If the quantity demands of the product change drastically when its price fluctuates, then this product is said to be as an elastic. Conversely, a product is said to be as an inelastic if the quantity demand of that product changes very little when its price increases or decreases.
Gasoline is the most prominent example of relatively inelastic demand. As the price of gasoline raised, the quantity demanded doesn’t decrease all that much. And, this is all because there are very few good substitutes for gasoline and purchasers are still willing to buy it even at relatively high prices.
Economist measures the PED in coefficients. Keep in mind, in response to the change in price, the demand for a product can say to be as elastic, perfectly elastic, inelastic, or perfectly inelastic that based on the coefficient.
When the PED for good is relatively inelastic (-1 < Ed < 0), the percentage change in quantity demanded is smaller than that in price. However, when the price is increased, the total revenue increases, and vice versa.
No doubt, generally the demand for the product increases as the price is lowered and declines as the price increases, that’s the reason why is the PED usually negative. Keep in mind, the change in price affects the likelihood of consumers concerning substitute’s products or a few steps to reduce their aggregate demand.
The given factors affect the elasticity of demand for a commodity:
PED is something that can also be used in the taxation policy in order to attain high tax revenue from the citizens. Price inelastic is one of the ways that taken into account by the government to raise tax revenue in commodities. For example, the Government could increase the tax amount in goods such as cigarettes and alcohol.
Several factors that affect the demand for a product, such as:
Thankfully, calculating PED becomes easy with the above calculator. Our price elasticity of demand calculator is an efficient and reliable tool that helps the company to fix their price, calculate and predict sales and revenue.