Price Income And Cross Elasticity Ppt Download
{"Image DocumentName": "Cross Elasticity of Demand", "Image ImageDescription": "Definition: Cross elasticity (Exy) tells us the relationship between two products. it measures the sensitivity of quantity demand change of product X to a change in the price of product Y. Formula: Exy = percentage change in Quantity demanded of X / percentage change in Price of Y. Characteristics: Exy > 0, Qd of X and Price of Y are directly related. X and Y are substitutes. Exy approaches 0, Qd of X stays the same as the Price of Y changes. X and Y are not related. Exy < 0, Qd of X and Price of Y are inversely related. X and Y are complements. Examples: 1. If the price of Product A increased by 10%, the quantity demanded of B increases by 15 %. Then the coefficient for the cross elasticity of the A and B is : Exy = percentage change in Qx / percentage change in Py = (15%) / (10%) = 1.5 > 0, indicating A and B are substitutes. 2. If the price of Product A increased by 10%, the quantity demanded of B decreases by 15 %. Then the coefficient for the cross elasticity of the A and B is : Exy = percentage change in Qx / percentage change in Py = (- 15%) / (10%) = < 0, indicating A and B are complements.", "Image XResolution": "37", "Image YResolution": "37", "Image ResolutionUnit": "Pixels/Centimeter", "Image Software": "SlidePlayer", "Image YCbCrPositioning": "Centered"}