price elasticity of demand

gistfile1.php

//http://en.wikipedia.org/wiki/Price_elasticity_of_demand

//In general, the demand for a good is said to be inelastic (or relatively inelastic) when the PED is less than one (in absolute value): 
//that is, changes in price have a relatively small effect on the quantity of the good demanded. 

//The demand for a good is said to be elastic (or relatively elastic) when its PED is greater than one (in absolute value): 
//that is, changes in price have a relatively large effect on the quantity of a good demanded.

//Revenue is maximized when price is set so that the PED is exactly one.

<?php

//original_quantity
$oq = 50;

//new quantity
$nq = 30;

//original price 
$op = 20;

//new price 
$np = 25;

//Change in Quantity = ((New Quantity - Original Quantity) / Original Quantity) 
$chiq = ($nq - $oq) / $oq;

//Change in Price = ((New Price - Original Price) / Original Price)
$chip = ($np - $op) / $op;

//Price Elasticity (PED or Ed) = Change in Quantity / Change in Price  Where,  
$ped = $chiq / $chip;

print abs($ped); // 1.6