Identify the two variables you want to compare
Compute the percentage change in the dependent variable
Compute the percentage change in the independent variable
Divide the percentage change in the dependent variable by the percentage change in the independent variable
Use the formula: Elasticity = (% change in Y) / (% change in X)
For price elasticity of demand, use: Elasticity = (% change in quantity demanded) / (% change in price)
For midpoint elasticity, use: Elasticity = [(Q2 – Q1) / ((Q2 + Q1) / 2)] / [(X2 – X1) / ((X2 + X1) / 2)]
Take the absolute value if only the magnitude is needed
Interpret values greater than 1 as elastic
Interpret values less than 1 as inelastic
Interpret values equal to 1 as unit elastic