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  Measures of cross-elasticity of demand

Measures of cross-elasticity of demand:

Infinity:

Commodity x is almost a perfect replacement for commodity y.

Zero:

Commodities x and y are not associated.

Negative:

Commodities x & y are complementary to each other.


Factors resolving elasticity of demand:

The elasticity of demand based on

A) Commodity nature,
B) Commodity uses,
C) Existence of replacements,
D) Demand Postponement,
E) Amount of cash spent,
F) Habits and 
G) Range of prices of commodity.

 

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