Calculation Method: Midpoint Formula (Arc Elasticity)
function calculatePES() {
// 1. Get DOM elements by ID strictly matching the input tags
var p1Input = document.getElementById('initialPrice');
var q1Input = document.getElementById('initialQty');
var p2Input = document.getElementById('newPrice');
var q2Input = document.getElementById('newQty');
var resultDiv = document.getElementById('resultOutput');
var valDiv = document.getElementById('pesValue');
var interpDiv = document.getElementById('pesInterpretation');
// 2. Parse values
var P1 = parseFloat(p1Input.value);
var Q1 = parseFloat(q1Input.value);
var P2 = parseFloat(p2Input.value);
var Q2 = parseFloat(q2Input.value);
// 3. Validation
if (isNaN(P1) || isNaN(Q1) || isNaN(P2) || isNaN(Q2)) {
alert("Please enter valid numeric values for all fields.");
return;
}
if (P1 < 0 || Q1 < 0 || P2 < 0 || Q2 < 0) {
alert("Price and Quantity cannot be negative.");
return;
}
// Prevent division by zero if prices are identical (no change in price)
if (P1 === P2) {
resultDiv.style.display = "block";
valDiv.innerHTML = "Undefined";
interpDiv.innerHTML = "Price did not change, elasticity cannot be calculated.";
return;
}
// 4. Calculate using Midpoint Formula (Arc Elasticity)
// % Change Q = (Q2 – Q1) / ((Q1 + Q2) / 2)
// % Change P = (P2 – P1) / ((P1 + P2) / 2)
var deltaQ = Q2 – Q1;
var avgQ = (Q1 + Q2) / 2;
var pctChangeQ = 0;
if (avgQ !== 0) {
pctChangeQ = deltaQ / avgQ;
} else {
// Edge case where both quantities are 0
pctChangeQ = 0;
}
var deltaP = P2 – P1;
var avgP = (P1 + P2) / 2;
var pctChangeP = deltaP / avgP;
var pes = 0;
if (pctChangeP !== 0) {
pes = pctChangeQ / pctChangeP;
}
// 5. Interpret the result
// Generally, supply elasticity is positive (Law of Supply).
// If the result is negative, it's displayed as is, but standard PES is typically absolute or positive.
// We will display the raw calculated value.
var pesText = pes.toFixed(2);
var interpretation = "";
// Determine Elasticity Class
var absPes = Math.abs(pes); // Using absolute for classification logic, though supply is usually positive
if (absPes === 0) {
interpretation = "Perfectly Inelastic";
} else if (absPes 1) {
interpretation = "Relatively Elastic";
}
// Handle Perfectly Elastic (conceptually infinite, usually handled by P1=P2 logic above, but checking huge numbers)
if (absPes > 999999) {
pesText = "∞";
interpretation = "Perfectly Elastic";
}
// 6. Update DOM
valDiv.innerHTML = pesText;
interpDiv.innerHTML = interpretation;
resultDiv.style.display = "block";
// Scroll to result
resultDiv.scrollIntoView({behavior: "smooth"});
}
What is Price Elasticity of Supply (PES)?
Price Elasticity of Supply (PES) is an economic metric that measures the responsiveness of the quantity supplied of a good or service to a change in its price. It helps businesses and economists understand how easily producers can increase or decrease their output when prices fluctuate in the market.
According to the Law of Supply, when the price of a product rises, suppliers usually increase the quantity supplied to maximize profits. PES quantifies exactly how much that quantity changes relative to the price change.
How the Calculation Works
This calculator uses the Midpoint Method (also known as Arc Elasticity). The Midpoint Method is preferred in economics because it provides consistent results regardless of whether the price rises or falls between the two points.
PES = (% Change in Quantity Supplied) / (% Change in Price)
Where:
% Change in Q = (Q2 – Q1) / ((Q1 + Q2) / 2)
% Change in P = (P2 – P1) / ((P1 + P2) / 2)
Interpreting Your Results
Once you calculate the PES value, it falls into one of these categories:
Elastic (PES > 1): Supply is very responsive to price changes. A small percentage increase in price leads to a larger percentage increase in supply. This is common for manufactured goods where production can be scaled up quickly.
Inelastic (PES < 1): Supply is not very responsive. A large price change leads to only a small change in quantity supplied. This often applies to agricultural products or housing, where it takes time to produce more units.
Unit Elastic (PES = 1): The percentage change in supply is exactly equal to the percentage change in price.
Perfectly Inelastic (PES = 0): Supply is fixed and cannot change regardless of price (e.g., land availability or tickets to a sold-out stadium).
Factors Affecting PES
Several factors influence whether supply is elastic or inelastic:
Spare Capacity: If a factory has idle machines, it can increase supply quickly (Elastic). If it is running at full capacity, increasing supply requires building new facilities (Inelastic).
Production Timeframe: Goods that take a long time to produce (like crops or complex electronics) generally have inelastic supply in the short run.
Stockpiles (Inventory): If a company has a large inventory of finished goods, they can respond immediately to price increases (Elastic).
Mobility of Factors of Production: If labor and capital can be easily moved to produce the good, supply is more elastic.
Example Calculation
Imagine a bakery sells 1,000 loaves of bread at $2.00. The market price rises to $2.50, and the bakery increases production to 1,500 loaves.
Using the calculator:
Initial Price: $2.00, New Price: $2.50
Initial Qty: 1,000, New Qty: 1,500
Result: PES = 1.80 (Elastic).
This means the bakery is highly responsive to price changes.