Cross-Price Elasticities

Note: you don't need to know this for the purposes of Ec10.

A question was asked about cross-price elasticities at the review session yesterday. Basically, cross price elasticities just measure the degree to which two goods are substitutes or complements. In other words, a cross-price elasticity is of the form:

% change in quantity demanded of good B/% change in price of good A

So this number would be positive for substitutes and negative for complements.

If you are curious, you can find more information here.