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Study Presentations

How Markets Work - Cross Price Elasticity of Demand

AS, A Level
AQA, Edexcel, OCR, IB

This is a revision presentation on cross price elasticity of demand

Cross Price Elasticity of Demand

Students need to be able to define cross price elasticity of demand and apply the correct formula to information on changing prices of two related products. In most questions, students are asked to apply the concept of cross price elasticity to a real world market, when there has been a change in the price of a substitute or a complementary product.

Strong evaluation questions the likely relative strength of the cross price effect. For example, when consumers are willing and able to switch their demand, the substitution effect is likely to be high.

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