This formula of the cross elasticity of demand. It uses to calculate the coefficient cross elasticity of demand.In the example: two goods cars and fuel-consist of fuel consumption,they are complements,because fuel and cars uses for each other and in this case cross elasticity of demand will be negative because it shows to us the decrease in demand for cars when the price of fuel is increased so and in this case of perfect complements, the cross elasticity of demand is negative infinity.
What are:
ReplyDeletea. competitive demand
b. derived demand
c. complementary demand
d. joint demand
1 Derived demand is when demand for one good or service occurs as a result of demand for another.
ReplyDelete2 Joint demand is a type of demand when the demand for two or more products is independent because they are used together.
3 Complementary demand is a type of demand where products normally can not be without each other, for example cars and fuel, cars can not work without fuel and fuel exists for cars.
4 Competitive demand is when products are substitutes for each other. For example: Coca-Cola and Dr.Pepper, if Coca-cola becomes more expensive,probably people will not buy it, but they have a substitute Dr.Pepper.
Include:
ReplyDeletea. examples with a numerical calculation
b. from the calculation draw an interpretation
That way you and others will understand