XED Nikolay Krylovskiy2020-01-29T13:38:55-05:00
Cross elasticity of demand (XED) – definition
Cross elasticity of demand refers to the responsiveness of demand for one good (X) to a change in the prices of a related good (Y). Shown by:
|% Change in quantity demanded (X)|
|% Change in price (Y)|
Hence, if the price of a smartphone Y increases from £400 to £440 (a 10% increase), and demand increases from 2m a year to 3m (a 50% rise) for smartphone X, XED for smartphones X and Y would be:
Which gives an XED value of (+) 5. The positive sign shows that price of Y and quantity demanded of X are positively related, which indicates they are substitutes, and the value (5) is greater than 1, which means the XED for smartphones X and Y is elastic and they are close substitutes.
The Growth of Tech Sector Economic Dominance The tech sector has been growing at an amazing rate over recent decades and has played a vital role in bolstering the economy of several world power countries. It ...
Hardest Hit Companies in the Travel & Entertainment Sector due to Covid-19 Coronavirus, declared by the World Health Organization as a global pandemic, has continued to rain havoc on people and businesses all over the ...
Cost Projections for Covid-19 Treatment in U.S Among the biggest issues that come with the novel coronavirus or COVID-19 pandemic is the impact it will make on the health care system. According to recent research published in Health Affairs, ...
Comparing Fiscal Responses to COVID-19 as Percentage of GDP across Countries Covid-19 has been the most dramatic financial event of our lives and so governments around the world have responded dramatically to this crisis. The ...
International Student College Enrollment Trends in the US International college students play a major part in our economy. According to a November 2019 article in Politico, during the 2018-2019 academic year alone international students added $41 ...
Cash On-Hand For FAANG Companies during Covid-19 Company cash on hand is one of the most important aspects of economics, especially for start-up businesses, and can be the reason for its success or failure. But ...