Enter the price of product A at two different time points and the demand for product B at those same time points into the cross-price elasticity calculator. The calculator will display the CPE.

## Cross Price Elasticity Formula

The following formulas can be used to calculate the price elasticity across two different products.

CPE = (PA1+ PA2) / (QB1 + QB2) * (QB2-QB1)/ (PA2-PA1)

• Where CPE is the cross-price elasticity
• PA1 is the price of product A at time point 1
• PA2 is the price of product A at time point 2
• QB1 is the quantity of product B at time point 1
• QB2 is the quantity of product B at time point 2

## Cross Price Elasticity Definition

A cross-price elasticity is a measure of the response between price and demand of a product or service.

## How to calculate cross price elasticity?

How to calculate cross price elasticity

1. First, find the price of A and demand of B at time point 1

This will be the total price of product A and the total demand in the quantity of product B at the starting time point.

2. Next, find the price of A and demand of B at time point 2

Just as done in step 1, find the price of A and demand of B at the ending time point.

3. Calculate CPE

Calculate the elasticity using the formula above and the price and demand from steps 1 and 2.

## FAQ

What is cross price elasticity

Cross price elasticity measures the effect changing in the price of one product, for example, product A has on the overall demand of another product B. An example of this is if you increase the price of Doritos in a convenience store, the demand for a similar generic chip may increase due to people not wanted to spend the extra money.