Cross Elasticity of demand.
It is the change in quantity demanded of commodity A due to the change in price of commodity B. The commodities can be either substitute or complementary. It tells us who the demand for any commodity depends upon the price of related goods.
Ec= proportionate change in quantity demanded of commodity A/ proportionate change in price of commodity B
Cross Elasticity of Demand for two goods may be positive ( substitute), negative ( complementary) and zero( not related).
1. Case of positive Cross Elasticity of Demand.
2. Case of negative Cross Elasticity of Demand
3. Case of Zero Elasticity of Demand
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