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Published on Nov 24, 2015

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PRESENTATION OUTLINE

SUBSTITUTES

KAILA, EDD(Y), PATRICK, SIERRA
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CROSS ELASTICITY PRICE OF DEMAND=

% Δ Quantity Demanded of X
__________________________
% Δ Price Y

Photo by EJP Photo

The cross-price elasticity of demand shows the correlation between the quantity demanded of one good and the price of another. With substitutes, as the price goes up of one good, the quantity demanded of the other will also go up, creating a positive fraction and a positive correlation.

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