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You are here: Home / Potpourri / Economics 101: Cross-Price Elasticity of Demand

Economics 101: Cross-Price Elasticity of Demand

Economics 101: Cross-Price Elasticity of Demand

[This is part of the series: The Complete Guide To Economics 101.]

What is the cross-price elasticity of demand?

The Cross-Price Elasticity of Demand is a measure of how sensitive quantity demanded of one good, or service, is to changes in the price of another good, or service.

For example:

If the price of hotdogs decrease by 10%, what would be the impact on quantity demanded for hotdog buns?

Or, if the price of apples increased by 10%, what would be the impact on quantity demanded for oranges?

(Cross-Price Elasticity of Demand) =  (% change in quantity demanded of good X) / (% change in price of good Y)

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Filed Under: PotpourriTagged With: #Economics101

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