To work out elasticity of demand it is necessary to first calculate the percentage change in quantity demanded and a percentage change in price. Change in quantity demanded New quantity demanded Old quantity demanded 100Old quantity demanded change in quantity demanded 3000 2000 1002000 change in quantity demanded 50. Multiply this by 100 and you get -50.
When using the above formula the percentage changes in price and quantity supplied are calculated by dividing the difference of initial pricequantity by the difference of final pricequantity respectively.
But this causes problem. Use the equation V2 - V1 V1 100 in which V1 represents an old or initial value and V2 represents the new or current value. Lets compare the two approaches. Then divided by the average of the two quantities demanded.