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Formula for Calculating Price Elasticity of Demand Price elasticity of demand (E) can be calculated using the formula: Where: Q1 is the quantity demanded before the price change Q2 is the quantity demanded after the price change P1 is the original price P2 is the new price For example, if you sold 100 refrigerators at $800 each, then lowered the price to $700 and sold 120 refrigerators in the same period, then: Q1=100 Q2=120 P1=800 P2=700 This formula provides a numerical value that shows how much the quantity demanded responds to price changes