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### Income, Cross-Price & Supply Elasticities

• Cross-price elasticity measures the responsiveness of demand for one good to changes in the price of another good.
• For substitutes, the coefficient will be positive.
• For complements, the coefficient will be negative.
• Income elasticity of demand measures how much quantity demanded changes with income
• For normal goods, the coefficient is positive.
• For inferior goods, the coefficient is negative.
• Elasticity of supply measures how suppliers will react to a change in price.
• If e > 1, supply is elastic.
• If e < 1, supply is inelastic.

### Income, Cross-Price & Supply Elasticities

Lecture Slides are screen-captured images of important points in the lecture. Students can download and print out these lecture slide images to do practice problems as well as take notes while watching the lecture.

• Intro 0:00
• Lesson Overview 0:16
• II. Product Markets 1:31
• What is Cross-Price Elasticity of Demand? 2:57
• Definition of Cross-Price Elasticity of Demand
• Formula
• Substitutes 6:24
• Definition of Substitutes
• Items Match as Substitutes
• If the Price of Good A Increases, then the Quantity Demanded of Good Will Increase
• If the Price of Good A Decreases, then the Quantity Demanded of Good Will Decrease
• Example 1 8:34
• Complements 9:35
• Definition of Complements
• Items Match as Complements
• If the Price of Good A Decreases, then the Quantity Demanded of Good Will Increase
• If the Price of Good A Increases, then the Quantity Demanded of Good Will Decrease
• Example 2 12:38
• Definition of Income Elasticity of Demand
• Normal Good
• Inferior Good
• Income-Elastic
• Income-Inelastic
• Formula for Income Elasticity of Demand 17:20
• Formula
• Example 3 21:39
• Example 4 24:52
• Price Elasticity of Supply 27:59
• Definition of Price Elasticity of Supply
• Formula
• Availability of Inputs Affects Elasticity
• Two Extreme Cases of Supply Price Elasticity 29:35
• Example 5 32:41