Elastiscity (Definitions) - XED

Question 1

XED

Answer 1

Cross elasticity refers to the responsivenss of quanntity demand of a god to change in price of another good.

Question 2

Substitutes

Answer 2

Goods used in place of eachother
XED >0, it is positive

Question 3

Compliments

Answer 3

Two goods used together
XED <0, it is negative

Question 4

Calculate XED

Answer 4

Δ quanity B/ (QB1+QB2)/2
……………………………..
ΔPA/(PA1+PA2)/2

Question 5

Relationship between goods chart

Answer 5

-3 -2 -1 0 1 2 3
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