Topic 9-cross elasticity Of Demand Flashcards
0
Q
Cross elasticity of demand (XED)
A
Is a m aspire of the responsiveness of the quantity demand of one product (Y) to a change in the price of another product (X)
XED=
percentage change in quantity demanded of product Y/ percentage change in price of product X
1
Q
A positive sign for XED indicates that
A
The products are substitutes ( e.g a rise in the price of a product will cause an increase in demand for another product)
2
Q
A negative sign for XED indicates that
A
Indicates that the product are complements (e.g a rise in the price of one product will cause a decrease in the price of another product)
