Cross-elasticity of demand

Cross-elasticity of demand,

Definition of Cross-elasticity of demand:

  1. Proportionate change in the demand for one item in response to a change in the price of another item. It is positive where the two items are mutual substitutes, and any increase in the price of one (say butter) will increase the demand for the other (say margarine). It is negative when the items are complementary and any increase in the price of one (say cars) will decrease the demand for the other (say tires). See also elasticity. Also called cross price elasticity.

Meaning of Cross-elasticity of demand & Cross-elasticity of demand Definition