ECON101: Principles of Microeconomics

The next elasticity of demand we will discuss is the cross-price elasticity of demand. There is no need to be intimidated by the complex sound of its long name!

The cross-price elasticity of demand simply measures the percentage change in the quantity demanded of one good or service due to the percentage change in the price of a related good or service. We are sure Elon Musk would like to know how much the quantity demanded of the Tesla Cybertruck would change in percentage terms in response to a given percentage change in electricity prices.