Cross elasticity

Cross elasticity,

Definition of Cross elasticity:

  1. The amount of change in demand for a product that is observed for a given change in the price of another product. The cross elasticity observed by a business when substituting one item for another similar item is generally positive. Nevertheless, a rise in the price of an important input can lead to a decline in the price for products that use that input, resulting in a negative cross elasticity effect.

Meaning of Cross elasticity & Cross elasticity Definition