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Economics 12 Notes for Economics Notes

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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,

Cross elasticity of demand

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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