The cross elasticity of demand for substitute goods is always positive.
The cross-price elasticity of demand refers to the percentage change in the quantity demanded of a given product due to the percentage change in the price of another "related" product.
Cross Price Elasticity of Demand measures the relationship between two products and how the price change of one affects the demand of the other.
These can be categorized into three types; substitute goods, complementary goods, and unrelated goods.
Cross Price Elasticity of Demand can be calculated by dividing the change in demand of X by the change in the price of Y.
Cross Price Elasticity of Demand (XED) assesses how two products are related to one another when the price of one changes.
How will the 20% increase in a Hershey's chocolate bar affect the demand for Snickers?
In other words, it determines how the change in the price of one product influences the demand for another.
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