Question

The cross-price elasticity between gillette razors and a related good is -3. What happens to the demand for the related good if the price of gillette razors falls by 10 percent?

Answer 1

If the price of Gillette razors falls by 10 percent the demand for the related goods will rise by 34%.

Cross-price elasticity measures how sensitive the demand of a product is over a shift of a corresponding product charge. regularly, within the market, some goods can relate to one another. this can mean a product's price rise or decrease can definitely or negatively affect the other product's demand.

If the absolute value of the cross elasticity of demand is more than 1, the cross elasticity of demand is elastic, which means a change in fee of product A affects a greater than a proportionate exchange in quantity demanded of product  B.

In economics, the cross elasticity of demand or cross-fee elasticity of demand measures the proportion of trade of the quantity demanded a product to the percentage of trade within the price of any other product, ceteris paribus.

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