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Microeconomic terms and definitions
XED (Cross Elasticity of Demand)
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XED
(Cross Elasticity of Demand)
a
measure
in
responsiveness
of
quantity
demanded
of a product for a change in the
price
of a
related
good
(substitute)
positive XED means
the goods are
substitutes
Negative XED means
the goods are
complements
XED equation
percentage change in
quantity
demanded
of
Good
1
divided
by percentage change in
price
of
good
2
XED of 0 means
goods are
unrelated
a
XED
of
-1
to
1
means goods have a
weak
XED
a XED of
-infinity
to
-1
or
1
to
infinity
means
goods have a
strong
XED
