Elasticity of demand only deals with one good, but Cross-price elasticity deals with two commodities. Income elasticity deals with income and quantity demanded. Elasticity of demand helps to detect how quantity demanded changes when price of a given good changes. For inelastic goods or services, increase in demanded quantity leads to decrease in price. The coefficient is thus less than one (negative). Price and quantity demanded are negatively related and so the prices of such good ought to be low for higher demand. On the other hand for elastic goods, the change in price leads to increase in demanded quantity, positively related. Their prices thus need to be set high for higher demand (Kowalski, 2005).

Cross-price elasticity assists in the comparison of demand of a good suppose the price of another is varied. The other can be substitutes or complements. Cross-price elasticity helps in setting the price a good suppose the prices of other are varied. When the coefficient of the cross—elasticity of the demand is negative it indicates that the good type is complementary and so price should be increased (Caldwell, 2003). One cannot do without complementary goods and so would always purchase regardless of its price. For substitutes, however, the coefficient of Cross-price elasticity is positive and so prices are to be decreased. People can easily shift to other goods and so necessity of reducing the price.

Income elasticity helps in determining the effects that change in income would bring to the demand of a good (Morse, 2002). When the coefficient is positive, normal goods, when income increases, the goods are to be priced higher. People tend to go for more fashionable, smart good when their incomes increase. Suppose coefficient is less than one, it indicates that that particular good is inferior and so when income of people increases, their prices should be decreased. Here, increase in income leads to decrease in demanded quantity and so quotient is negative (Caldwell, 2003).