Cross elasticity of demand



It refers the percentage change in quantity demand of one commodity i.e. x due to certain change in price of another commodity i.e. y when other things remains the same.

Mathematically,

economics

 

where,

exy = cross elasticity of demand

∆Qx = change in quantity demand for x commodity

∆Py = change in price of y commodity

Py = initial price of y commodity

Qx = initial quantity demand for x commodity

 

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