CROSS ELASTICITY An economic concept that measures the responsiveness in the quantity demand of one good when a change

in price takes place in another good. The measure is calculated by taking the percentage change in the quantity demanded of one good, divided by the percentage change in price of the substitute good:

Cross elasticity of demand is synonomous to "cross price elasticity of demand".

The cross elasticity of demand for substitute goods will always be positive, because the demand for one good will increase if the price for the other good increases. For example, if the price of coffee increases (but everything else stays the same), the quantity demanded for tea (a substitute beverage) will increase as consumers switch to an alternative. On the other hand, the coefficient for compliments will be negative. For example, if the price of coffee increases (but everything else stays the same), the quantity demanded for coffee stir sticks will drop as consumers will purchase fewer sticks. If the coefficient is 0, then the two goods are not related.

In case of substitute goods for each other than the price ofone good wil lead to an increase in price of one good will lead to an increase in demand f the other good.The numerical value is good.

Case studyA case study of two products of the cell phone industry until the fiscal year 2011 nokia held the major chunk of the smartphone was held by nokia i.e 46.8% and Samsung only 27.4 % of the market share but the introduction of products like . By the end of q3 I 2012 the Korean company had overtaken the finnish giant.Due to the competitive pricing with which the

Comparitive analysis of global cell phone giants in smatphone arena. With the global smartphone giants like Samsung , nokiza and apple competing in the smartphone secition of the cell phone industrythe fluctuation in price of a companys products is most likely to affect the units sold or bought by the consumers, the croos elasticity of demand should be read I t Wen goos are substitute of each other