Question

What is the formula for calculating elasticity?

Short answer

Price Elasticity of Demand = $\%$of the change in quantity demanded $/\%$of the change in price.

Step-by-step solution

Definition

Elasticity of demand :

The degree to which demand changes in response to changes in another economic component, such as price or income, is referred to as elasticity of demand. Demand can be elastic, inelastic or unitary elastic.

Explanation

Price elasticity is calculated by the ratio of the proportionate change in quantity demanded and proportionate change in price.

$PriceElasticityofDemand=\frac{\%changeinquantitydemanded}{\%changeinprice}$