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4 Tutorials that teach Cross-Price Elasticity Formula by Catherine Barry
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Cross-Price Elasticity Formula by Catherine Barry

Cross-Price Elasticity Formula by Catherine Barry

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Author: Sophia Tutorial
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Calculate the cross-price elasticity of two goods.

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Tutorial

Video Chapters

(00:00 - 00:23) Introduction
(00:24 - 00:46) Cross-Price Elasticity
(00:47 - 01:32) Key Term Review: Complement & Substitute Goods
(01:33 - 03:03) Coke Machine Example
(03:04 - 04:03) PB&J Example
(04:04 - 04:49) Elasticity Formula
(04:50 - 05:18) Review

Terms to Know
Complement Goods

A good for which the demand increases as the price of an associated good decreases.

Cross-Price Elasticity

Change of demand that occurs due to change in price of substitutes or complements.

Substitute Goods

As the price of one good increases, the demand for an alternative good meeting the same consumer needs increases.

Formulas to Know
Cross-Price Elasticity

E equals fraction numerator bevelled fraction numerator open parentheses Q subscript A minus Q subscript B close parentheses over denominator open parentheses Q subscript A plus Q subscript B close parentheses end fraction over denominator bevelled fraction numerator open parentheses P subscript A minus P subscript B close parentheses over denominator open parentheses P subscript A plus P subscript B close parentheses end fraction end fraction
w h e r e space Q subscript A space & space Q subscript B space a r e space o f space o n e space g o o d space a n d space P subscript A space & space P subscript B space a r e space o f space a space r e l a t e d space g o o d.