Namc
Cross Price Elasticity of Demand
Brulius is opening a new health food market and is trying to price out his items. Find the cross
price elasticity of the goods given.
Good A:
Situation 1 479
Situation 2 621
Q P
Good B
Remember, quantity of good A, price of good B.
$4.99
$3.49
Variables:
Q P
Situation 1 305 $6.14
Situation 2 830 $5.07
Solve showing ALL work:
Coefficient of Elasticity:
Cross-Price
Elasticity of Demand
Q₂2-Q₁
(Q₁ + Q₂)/2
P₂ - P₁
(P₁ + P₂) / 2
Elastic (above one) or Inelastic (below one):
Substitutes (Positive Coefficient) or Complements (Negative Coefficient) or Unrelated (Near
Zero):
