The objective of this simulation is to illustrate how to calculate and apply the price elasticity of demand.

The price elasticity of demand is a very important economic concept that can be applied across a broad range of areas in economics and business studies. The price elasticity of demand measures how the demand for a good responds to a change in the price. It is calculated as the percentage change in quantity divided by the percentage change in price.

You can download an Excel version of the original spreadsheet (Excel 97)

The simulation allows the individual to calculate a price elasticity of demand using their own quantity and price settings, and apply the consequences of a change in price on the original and new total revenues.

The model settings for the inputs are;

• Original Price (£): 50 to 150
• Original Quantity (£): 50 to 150
• Final Price (£): 50 to 150
• Final Quantity: 50 to 150
• Value of PED: -2.00 to 0
• Percentage change in price (%): -20.00 to 20.00

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