XED Flashcards
1
Q
Define Substitute goods
A
Substitute goods have alternative for customers.
2
Q
Define complementary goods
A
Products that are consumed together
3
Q
Definition for cross price elasticity (XED)
A
The responsiveness of demand for Good X following a change in price of Good Y
4
Q
Formula for Cross Price Elasticity (XED)
A
% change in quantity of Good X/% change in price of Good Y
5
Q
Links between complementary goods and XED?
A
Negative XED = Price of Y increases, causing Demand of X to fall!
6
Q
Links between Substitute Goods and XED?
A
Postive XED: Price of Y increases, causing demand for X to increase.
7
Q
Complementary Goods demand Graph?
A
Downward sloping linear graph (Drawn pg 3)
8
Q
Substitute Goods Demand Graph?
A
Upward sloping linear graph (Drawn pg 3)
