XED

• what is XED?

  Cross elasticity of demand

  measures the responsiveness of quantity demanded of a product for a change in the price of a related good
• what is the formula for XED?

  XED = (%change in Qd of good 1) / (%change in P of good 2)
• what is the range of figure for an elastic XED?

  -infinity to -1 and 1 to infinity
• what is the range of figures for an inelastic XED?

  -1 to 1
• what is the range of figures (XED) for a complimentary good?

  -infinity to 0 (negative numbers)
• what is the range in figures (XED) for substitute goods?

  0 to infinity (positive numbers)
• what is the explanation of goods that have an elastic XED?

  a change in price of one good leads to a more than proportionate change in the other good
• what is the explanation of goods that have a inelastic XED?

  a change in the price of one good leads to a less than proportionate change in demand for the other good