Cross Elasticity of Demand

0.0(0)
studied byStudied by 0 people
0.0(0)
full-widthCall Kai
learnLearn
examPractice Test
spaced repetitionSpaced Repetition
heart puzzleMatch
flashcardsFlashcards
GameKnowt Play
Card Sorting

1/7

encourage image

There's no tags or description

Looks like no tags are added yet.

Study Analytics
Name
Mastery
Learn
Test
Matching
Spaced

No study sessions yet.

8 Terms

1
New cards

Cross Elasticity of Demand

Measures the responsiveness of quantity demanded of a good/service given a change of price in another.

2
New cards

XED formula

% change in Quantity demanded of good A/% change in Price in good B

3
New cards

XED figure positive

The two goods are substitutes. It means that if a price of a substitute goes up the quantity demanded of the other goes up too.

4
New cards

XED figure negative

The two goods are complementary. If a complementary good’s price goes up the other’s demand goes down.

5
New cards

XED >1

Demand between the goods is price elastic (strongly related)

6
New cards

XED <1

Demand between the goods is price inelastic (weakly related)

7
New cards

XED = 0

Demand between the good is perfectly price inelastic (no relationship)

8
New cards

XED Graph

Quantity of good A on the horizon and Price of good B on the vertical.

<p>Quantity of good A on the horizon and Price of good B on the vertical.</p>