Tesla Deliveries Rose 83% in the Latest Quarter

That's Right! - The price elasticity of demand is calculated as the percentage change in the quantity demanded divided by the percentage change in price, where the changes are calculated relative to the average quantity and average price. In the second quarter, the quantity demanded increased by 83 percent of the initial quantity or 58.7 percent of the average quantity. Calculating the percentage change in price using the average price, price decreased by 26.6 percent. So, the price elasticity of demand equals 58.7 percent/26.6 percent, which is greater than 2.

Well Done! - The price elasticity of demand exceeds one, so demand is elastic. When demand is elastic, a 1 percent price cut increases the quantity sold by more than 1 percent and total revenue increases.