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Cross Price Elasticity Calculator

This calculator evaluates the cross price elasticity of demand between two products — a key metric in economics and pricing strategy. It helps businesses understand how the demand for one product changes when the price of a related product changes.

Cross Price Elasticity of Demand Tool

Input Fields
Q1
Quantity demanded of Good A before the price change of Good B
Q2
Quantity demanded of Good A after the price change of Good B
P1
$
Original price of the related product (Good B)
P2
$
New price of the related product (Good B)
If enabled, the result will update automatically when you change any value.

Cross Price Elasticity Formula

Formula
$$\text{Cross Price Elasticity} = \frac{\%\ \text{Change in Quantity Demanded of Product A}}{\%\ \text{Change in Price of Product B}}$$ $$\text{E}_{xy} = \frac{\left(\frac{Q_{A2} – Q_{A1}}{Q_{A1}}\right)}{\left(\frac{P_{B2} – P_{B1}}{P_{B1}}\right)}$$

Explanation:
This formula measures the responsiveness of the demand for one good when the price of another good changes. A positive result indicates substitute goods, while a negative result indicates complementary goods.

Cross price elasticity is widely used in market research, pricing decisions, and competitive strategy. It helps determine whether products are substitutes or complements, and how sensitive consumers are to price changes.

Variables Example:

  • Quantity of Product A before: 100 units
  • Quantity of Product A after: 120 units
  • Price of Product B before: $10
  • Price of Product B after: $12

Calculation:

$$E = ((120 – 100) / 100) / ((12 – 10) / 10) = (0.2 / 0.2) = 1$$
This result indicates that Product A and B are substitutes.

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