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Economics Lecture Five (view source)

Revision as of 14:14, October 5, 2009

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→‎Cross Elasticity: formula
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=== Cross Elasticity ===
 
=== Cross Elasticity ===
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Once you fully understand price elasticity of demand, then it is easy to understand the concept of "cross elasticity of demand.  Cross elasticity of demand is the percent change in demand of '''''one good''''' due to a change in the price of a '''''different good'''''.  The two goods are either substitutes or complements for each other, which makes their cross elasticity useful.  The symbol for cross elasticity of demand is "Xed", with "X" representing the "cross" and "ed" representing the "elasticity of demand."
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Once you fully understand price elasticity of demand, then it is easy to understand the concept of "cross elasticity of demand." Cross elasticity of demand is the percent change in demand of '''''one good''''' due to a change in the price of a '''''different good'''''.  The two goods are either substitutes or complements for each other, which makes their cross elasticity useful.  The symbol for cross elasticity of demand is "Xed", with "X" representing the "cross" and "ed" representing the "elasticity of demand."
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Mathematically, cross elasticity is as follows:
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:<math>Xed = \frac{% \Delta (Quantity-demanded-of-good-Y)}{% \Delta (Price-change-in-good-X)}</math>
    
=== Supply Elasticity ===
 
=== Supply Elasticity ===
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