Calculate cross-price elasticity and analyze product relationships
Formula: Cross-Price Elasticity = (% Change in Quantity of A) / (% Change in Price of B)
Substitute Goods (XED > 0): When the price of one increases, demand for the other increases (e.g., coffee and tea).
Complementary Goods (XED < 0): When the price of one increases, demand for the other decreases (e.g., cars and gasoline).
Independent Goods (XED ≈ 0): Price changes in one product don't affect demand for the other.
Business Application: Helps businesses understand competitive relationships and pricing strategies.