XED Flashcards
What does CED measure?
The responsiveness of quantity demanded of a good/service a change in price of another
Natures of demand relationship?
Complementary goods
Substitutes
An absence of any discernable demand relationship
A significant increase in petrol prices…
Will have an effect on demand for cars
A significant increase in cost of running cars…
Will cause people to switch to public transport
Formula for XED?
% change in quantity demanded of good A/ % change in price of good B
What does it mean if the XED figure is positive?
It means the 2 goods are substitutes
What does it mean if the XED figure is negative?
Means they’re complementary goods
What way does the curve slope for complements?
The D-Curve slopes downwards
What way does the curve slope for substitutes?
D-Curve slopes upwards
