how to calculate the price elasticity of demand
if the price of a product decreases from 10 to 8 leading to an increase in quantity demanded from 40 to 60 units then the price elasticity of demand can be calculated as 2since we re concerned with the absolute values in price elasticity the negative sign is ignored you can conclude that the price elasticity of this good when the price decreases from 10 to 8 is 2 5 arc elasticity of demandone of the problems with the price elasticity of demand formula is that it gives different values depending on whether price rises or falls 2 if you were to use different start and end points in our example above that is if you assume the price increased from 8 to 10 and the quantity demanded decreased from 60 to 40 the ped will be 