Price elasticity of demand is a term from Economics. It is defined as the absolute value of the percent change in the quantity of a product or service demanded by consumers resulting from a percentage change in the price, i.e., |(DQ/Q)/(DP/P)|.
The downloadable Excel workbook interactively illustrates the demand elasticity for a linear demand function. It also includes a graphical display of the profit function for a monopolist.
The top part of the worksheet allows one to customize the linear demand function. Do so by entering two data points each representing a price and a quantity.
Figure 1
The lower part of the worksheet is an interactive display of the market clearing price and quantity, the associated demand elasticity, and the monopolist's profit.
Figure 2
The worksheet contains additional information in the form of cell comments.
