MIDPOINT ELASTICITY FORMULA:

So, the Price Elasticity of Demand is really important concept in micro economics. It’s all about measuring
the responsiveness of quantity demanded when there’s a change in price.

So, we can calculate that, we can give price elasticity demand and the actual value and we need an
equation to do that.

The midpoint elasticity formula is a common method of calculating elasticity, especially the price elasticity
of demand, price elasticity of supply, income elasticity of demand, and cross elasticity of demand.Because
demand is downward sloping, the elasticity should always be negative. Often negative sign is disregarded
and the elasticity is referred to by its absolute value or real value.

If the results are greater than 1 absolute value, the demand is Elastic

If the results are less than 1 absolute value, the demand is Inelastic

If the results are equal 1 absolute value, the demand is Unit Elastic

Anytime we can use that, especially to make critical decision about on raising or lowering our prices. Also,
we can use elasticity of demand data to predict the potential impact of a price change on our total sales
revenues.

The midpoint formula will help us to be able to find out how changing our price will affect the demand of
a good or service.