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What is the cross-elasticity of supply of one of the goods or services that your company...

What is the cross-elasticity of supply of one of the goods or services that your company provides? Why? How does your answer relate with another student ...
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Answer #1

Let's take the example of a car manufacturing company.

Now, if the price of steel increases, this means that the cost of production of cars will increase. This would affect the supply of cars. This is an example of cross-price elasticity wherein the changes in the supply of cars gets affected by the changes in the price of steel. Cars can have relatively high elasticity or low elasticity towards changes in price levels of steel. It completely depends on how much steel is used in manufacturing that particular car. If a lot of steel is used in the manufacturing of car, then the cross-price elasticity will be relatively higher as against when a little amount of steel is used in its manufacturing.

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