XeD

• Definition of XeD


  The responsiveness of demand of one good to changes in the price of a related good- either a substitute or a complement
• Formula for XeD


  Formula:

  
• Goods which are complements:

  Have a negative sign (inverse relationship)
• Goods which are substitutes:

  Have a positive sign (positive relationship)
• Perfect Complements

  Must be bought together, e.g. Pencil and Eraser

  Base good and complementary good, e.g Printer and Ink
• Value range of XeD

  -Infinity to + Infinity