Since some individuals would have a use for a left shoe devoid
of a right shoe and vice versa, consequently the cross price
elasticity would be extremely near unitary.
- The cross-price elasticity can be a positive or negative, which
depends on whether the goods are complements or substitutes. If
there is an increase in demand for one accompanied by an increase
in the quantity demanded of the other, then two products are
complements. The quantity demanded of the other good will increase
if the price of the complement falls, therefore cross-price
elasticity for complementary goods will be negative. While as
positive cross-price elasticity indicates that the two goods are
substitutes.
- Unitary price elasticity of demand
is the one when for a given percentage shift in the
price of the product leads to an equal but
opposite percent change in the amount of product demanded.