Cross Price Elasticity Calculator

Enter the 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 poin 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 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 a 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 convenient store, the demand for a similar generic chip my increase do to people not wanted to spend the extra money.

cross price elasticity calculator