Principles of Microeconomics / Unit 4 MIC 0320 short lesson, about 20 seconds
Cross-Price Elasticity of Demand
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The idea
Cross-price elasticity is the percentage change in the quantity of one good demanded divided by the percentage change in the price of another. Positive means substitutes; negative means complements; near zero means unrelated.
In practice
Dearer tea raising coffee demand gives a positive number.
Where people slip
The sign carries the classification and is never dropped here; elastic and inelastic are not used for these.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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