What are the factors affecting Cross-Price Elasticity?

First, it is important to understand the difference between own price elasticity and cross-price elasticity.Own price elasticity concerns about the responsiveness of the the quantity demanded of good X to a change in its own price; while cross-price elasticity concerns with the responsiveness of demand of good X to a change in price of good Y.So the size of cross-price elasticity, i.e. the sign and the absolute value will depend on the relationship between good x and good y.If X and Y are complements, then cross-price elasticity is negativeWhen X and Y are substitutes, then cross-price elasticity is positiveIf X and Y are unrelated, cross-price elasticity is zero.The absolute value will depend on how closely the two goods are related, ie the stronger the correlation, the larger the absolute value

HC
Answered by Helen C. Economics tutor

7613 Views

See similar Economics IB tutors

Related Economics IB answers

All answers ▸

Explain the concept of price elasticity of demand.


Explain why a perfectly competitive firm will make normal profit in the long run.


What are positive externalities of consumption? Explain with a diagram and give an example.


Do I have to be good at Maths to achieve good results in IB Economics?


We're here to help

contact us iconContact ustelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

MyTutor is part of the IXL family of brands:

© 2026 by IXL Learning