Different Formulas to Calculate the Price Elasticity of Demand. Do not assume that if you lower your prices, demand will increase enough to make up the difference in income you will receive for ...

So, if price increases by 10 percent, and demand falls by -0.5 percent, the price elasticity of demand would be -0.5. However, by convention, price elasticity is expressed as a positive number.

So if a 10% price increase leads to a 15% increase in quantity supplied, we say the elasticity is 1.5 (which is 15 divided by 10). That will be the first concept to ponder.

The price elasticity of demand, to use its full name, measures how sensitive buyers are to price changes. Typically, when the price of, say, a can of Coke goes up, people buy fewer cans or switch ...