Cross elasticity of demand (XED)

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  • Created by: Jade
  • Created on: 20-11-12 19:08
What is cross elasticity of demand?
The responsiveness of demand for one product in relation to a change in the price of another product.
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Cross elasticity of demand is measured by which formula?
% change in quantity demanded in product A/% change in price of product B
2 of 7
A positive estimate indicates that the two products are..?
Substitutes
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A negative estimate indicates that the two products are?
Complements
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Where products are good or close substitutes, the value of XED will be ______ than if they are only modest substitutes.
Higher
5 of 7
Heinz baked beans and tesco value baked beans are?
Substitutes
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A television and a DVD player are?
Complements
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Other cards in this set

Card 2

Front

Cross elasticity of demand is measured by which formula?

Back

% change in quantity demanded in product A/% change in price of product B

Card 3

Front

A positive estimate indicates that the two products are..?

Back

Preview of the front of card 3

Card 4

Front

A negative estimate indicates that the two products are?

Back

Preview of the front of card 4

Card 5

Front

Where products are good or close substitutes, the value of XED will be ______ than if they are only modest substitutes.

Back

Preview of the front of card 5
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