Midpoint formula

The elasticity $$\epsilon$$ can be calculated using the midpoint formula:

$$\epsilon = 100*\frac{\frac{Q_1 – Q_0}{\bar{Q}}}{ \frac{P_1 – P_0}{\bar{P}}}$$

where $$X_0$$ is the initial quantity, $$X_1$$ is the new quantity, $$\bar{X}$$ is the average quantity, $$P_1$$ is the new price, $$P_0$$ is the initial price and $$\bar{P}$$ is the average price.

The average quantity is calculated:

$$\bar{Q} = \frac{Q_1 + Q_0}{2}$$

The average price is also calculated:

$$\bar{P} = \frac{P_1 + P_0}{2}$$

Example

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