Wednesday October 24

Formative Quiz - Price Elasticity of Demand

• Please complete quiz if you haven't done so already
• Homework 4.1 and 4.2 Answers

 New Concepts:

• Cross Elasticity of Demand (XED)
• Definition
• Formula
• Significance with respect to substitutes and compliments

Resources:

Power Point - Cross Elasticity of Demand

Khan Academy Video - Cross Elasticity of Demand

Mr. Clifford Video - Cross Elasticity of Demand

Textbook Pages 53-54

XED  =  % Change in Quantity Demanded of product x

               % Change in Price of product y

If XED is a positive number than product X and product Y are viable substitutes.nThe higher the number the closer the substitute they are

If XED is a negative number than product X and Y are complimentary goods.nThe higher the negative number the more complimentary they are

If XED is close to zero the products are basically unrelated.nThe closer to zero the products are the more unrelated they are

Homework: Due Friday October 26

Student Workpoint 4.5