011-40705070  or  
Call me
Download our Mobile App
Select Board & Class
  • Select Board
  • Select Class
 

What is cross elasticity of demand ? Explain it with examples?

Asked by Deep Ludhiyani(student) , on 30/11/13


Become Expert
Score more in Economics
Start Now with Video Lessons, Sample Papers, Revision Notes & more for Class-XII-Commerce - CBSE 

EXPERT ANSWER

The   cross elasticity of demand   or   cross-price elasticity of demand   measures the responsiveness of the  demand  for a  good  to a change in the price of another good. It is measured as the  percentage change demand for the first good that occurs in response to a percentage change in price of the second good. For example, if, in response to a 10% increase in the price of fuel, the demand of new cars that are fuel inefficient decreased by 20%, the cross elasticity of demand would be:   frac{-20 %}{10 %}=-2

Posted by Juhi Grover(MeritNation Expert)on 2/12/13

This conversation is already closed by Expert

More Answers

it measures the change in demand for main commodity due to change in prices of substitute or complementary commodity

Posted by Neha Agarwal(student)on 1/12/13

Ask a QuestionHave a doubt? Ask our expert and get quick answers.
Show me more questions

close