Cross Elasticity of Demand (XED)

Question 1

What is XED

Answer 1

Cross elasticity of demand is the responsiveness of demand for good B to change in price of good A

Question 2

XED equation

Answer 2

% change in demand for good B /
% change in price of good A

Question 3

what are goods in competitive demand called

Answer 3

substitute goods

Question 4

what are goods called when they are consumed together

Answer 4

complementary goods

Question 5

What does a substitutes XED graph look like

Answer 5

price on the y-axis, quantity on the x-axis, upward-sloping curve

Question 6

What does a complementary XED graph look like

Answer 6

price on the y-axis, quantity on the x-axis, downward sloping curve

Question 7

What will the XED value of two unrelated goods look like

Answer 7

it will have a value of 0

Question 8

What will the XED value of two substitute goods look like

Answer 8

it will be greater then 0

Question 9

What will the XED value of two complementary goods look like

Answer 9

it will be less then 0