Determine if two goods are substitutes, complements, or unrelated using price and quantity changes.
Cross-price elasticity measures how the demand for one good changes when the price of a related good changes. The sign and magnitude tell you about the relationship between the goods.
| Value | Relationship | Example |
|---|---|---|
| > 0 | Substitutes | Coca-Cola and Pepsi |
| < 0 | Complements | Printers and Ink |
| ≈ 0 | Unrelated | Pizza and Socks |