Cross Elasticity of Demand Flashcards
1
Q
What is the acronym for cross elasticity of demand
A
XED
2
Q
What is the equation of XED
A
% change in quantity demanded (A) / change in price (B)
3
Q
Do substitutes have positive or negative XED
A
poSitive
4
Q
Why do substitutes have positive XED
A
as when price increases of one the demand of the other increases
5
Q
Do complements have positive or negative XED
A
negative
6
Q
Why do complements have negative XED
A
as when price increases of one the demand of the other decreases
7
Q
What is XED
A
the responsiveness of the quantity demanded to a change in price of another related good
8
Q
A
