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Cross Elasticity of Demand
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Cross Elasticity of Demand
Measure of the repsonsivness of change in demand for product B due to change in price for product A
Positive XED = Substitute good
- e.g. A rise in price of product A will cause an increase in demand for product B
- Chicken and Beef
- e.g. A rise in price of product A will cause an increase in demand for product B
Negative XED = Complement goods
- e.g. A rise in price of product A will cause a decrease in demand for product B
- Phone and Phone charger
- e.g. A rise in price of product A will cause a decrease in demand for product B
Value to business
- Helps to set price for a product
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- A-Level Economic Mind Map on Cross Elasticity of Demand, created by indysingh7285 on 07/02/2016.
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- indysingh7285
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