1. What is the Elasticity Coefficient?

The Elasticity Coefficient measures the responsiveness of quantity demanded or supplied to changes in price. It quantifies how much the quantity changes in percentage terms when price changes by 1%.

2. How Does the Calculator Work?

The calculator uses the Elasticity Coefficient formula:

Where:

• \( E \) — Elasticity coefficient (dimensionless)
• \( \%\Delta Q \) — Percentage change in quantity (%)
• \( \%\Delta P \) — Percentage change in price (%)

Explanation: The formula calculates the ratio of percentage change in quantity to percentage change in price, providing a unitless measure of responsiveness.

3. Importance of Elasticity Calculation

Details: Elasticity coefficients are crucial in economics for understanding market behavior, setting pricing strategies, predicting revenue changes, and analyzing consumer behavior patterns.

4. Using the Calculator

Tips: Enter percentage change in quantity and percentage change in price as decimal numbers (e.g., 10% as 10). The calculator will compute the elasticity coefficient.

5. Frequently Asked Questions (FAQ)

Q1: What do different elasticity values mean?
A: |E| > 1 = elastic, |E| < 1 = inelastic, |E| = 1 = unit elastic, E = 0 = perfectly inelastic, E = ∞ = perfectly elastic.

Q2: How is percentage change calculated?
A: %Δ = [(New Value - Old Value) / Old Value] × 100%

Q3: What affects price elasticity of demand?
A: Availability of substitutes, necessity vs luxury, time horizon, proportion of income spent, and brand loyalty.

Q4: Can elasticity be negative?
A: Yes, for normal goods, price elasticity of demand is negative due to inverse price-quantity relationship.

Q5: How is elasticity used in business decisions?
A: Helps determine optimal pricing, predict revenue changes, understand market competition, and develop marketing strategies.