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The cross elasticity of demand calculates the responsiveness of the quantity demanded of one product to alters in the price of another product. For example, the quantity demanded of Coca-Cola to alters in the price of Pepsi. Cross elasticity of demand gives an indication of how close a substitute or complement one commodity is for another. This concept has substantial practical value in formulating marketing strategies for most products.
What are the determinants of income elasticity of demand? There are three determinants of income elasticity of demand. These are: Degree of necessity of a good: In a developed
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