crosselastic - R Larry Reynolds 1999 Elas ticity m asure...

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R Larry Reynolds 199 Elasticity measures the percentage change in a dependent varable "caused" (or associated with) a change in the independent variable. Cross elasticity measures the change in the demand for good X caused by a change in the price of some other related good, either a compliment or subsitute. A significant negative coefficient of cross elasticity indicates the two goods are compliments while a significant positive coefficient suggests that the goods are substitutes. A coefficient that is not significantly different from 0 suggests the goods are unrelated. In this model a simple demand function with the prices of compliments and subsitutes included will be used to calculate the coefficients of cross elasticity of demand . NOTICE that the pages on compliments and substitutes are linked to changes made to the demand function in the demand review. You can go back and change the demand function to observe effects of changes.
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iven a demand functio 15 - 2.7 4.0 1.0 R Larry Reynolds 199 When Py = $5.00 Pc = $2.00
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crosselastic - R Larry Reynolds 1999 Elas ticity m asure...

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