Price elasticity of demand is the percentage change in quantity divided by the percentage change in price, with both percentages taken by the midpoint method: the change divided by the average of the two values. That way the elasticity between two points is the same whether the price rises or falls.
From B to A the price falls from $70 to $60, a 15.4% change, while quantity rises from 2,800 to 3,000, a 6.9% change, so the elasticity is 0.45: inelastic. From G to H the price rises from $120 to $130, an 8% change, while quantity falls from 1,800 to 1,600, an 11.76% change, so the elasticity is 1.47: elastic. Demand is inelastic at the bottom of this straight line and elastic at the top. Elasticity changes along a straight-line demand curve even though its slope does not.
| Segment | % change in Q | % change in P | Elasticity |
|---|