Cross Elasticity of Demand (XED)

XED

Cross-Price Elasticity of Demand calculation that measures how the quantity demanded of one good changes in response to a change in the price of another good.

Complementary Goods

Goods that are typically consumed together, where a decrease in the price of one good leads to an increase in the quantity demanded of the other good.

Substitutes

Goods that can be used in place of each other, where an increase in the price of one good leads to an increase in the quantity demanded of the other good.

Negative XED

Indicates that the two goods are complements, as a decrease in the price of one good leads to an increase in the quantity demanded of the other.

Positive XED

Indicates that the two goods are substitutes, as an increase in the price of one good leads to an increase in the quantity demanded of the other.