Cross Price Elasticity Calculator
Compare the percentage change in demand for good A with the price change of good B, using initial values.
Formula
Elasticity = [(Q2−Q1)/Q1] / [(P2−P1)/P1]
Cross-price elasticity ≈ (((120)-(100))÷(100))÷(((12)-(10))÷(10))
How to use
- Enter old and new quantities demanded of good A.
- Enter old and new prices of good B; prices must differ.
- Read the signed cross-price elasticity.
Examples
- Demand A +20% and price B +20% give elasticity 1.
Frequently asked questions
Which percentage convention is used?
Changes are divided by initial values, not midpoint averages.
What do the signs mean?
Positive suggests substitutes; negative suggests complements, holding other factors fixed.
Why does unchanged price fail?
Its percentage change is zero, so elasticity is undefined.
Sources
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