Discuss the cross-price elasticity of demand calculator.

Solution

VerifiedLet us define the concept in the given question.

**Cross-price Elasticity of Demand** refers to the economic indicator that measures the **response of the quantity demanded of the first product to the change in the price of the second product**. For instance, it measures the increase or decrease in demand for apples when the price of oranges increases or decreases.

This can be calculated as follows:

$\text{Cross-price Elasticity of Demand} = \frac{\text{\% change in quantity demanded of good 1}}{\text{\% change in price of good 2}}$

Now, if the cross-price elasticity of demand is positive, it means that the percentage change in the price of a product provides a positive change in the demand for another product. This implies that the two products are substitutes.

If the cross-price elasticity of demand is negative, it means that the percentage change in the price of a product provides a negative change in the demand for another product. This implies that the two products are complements.

The cross-price elasticity of demand calculator is an application that can be searched through the internet where we can input the values required. This provides us with the immediate value of elasticity and determines how the two goods are related to each other.

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