Definition
- Pricing related goods
- Pricing related goods uses the cross-price elasticity of demand, which shows how far a change in one good's price moves demand for another.
Example
Can you think of an example of pricing related goods?
A printer maker sells printers cheaply because the cross elasticity between printers and its own ink is strongly negative: every extra printer sold means more ink sold.
Test yourself
Can you name the four decisions an elasticity estimate helps to make?