Editing Cross elasticity of demand (section)

==Results for main types of goods==
For two goods, fuel and new cars (consists of fuel consumption), are ''[[complement good|complements]]''; that is, one is used with the other. In these cases the cross elasticity of demand will be ''negative'', as shown by the decrease in demand for cars when the price for fuel will rise. In the case of perfect substitutes, the cross elasticity of demand is equal to positive infinity (at the point when both goods can be consumed). Where the two goods are ''[[Independent goods|independent]]'', or, as described in [[consumer theory]], if a good is independent in demand then the demand of that good is independent of the quantity consumed of all other goods available to the consumer, the cross elasticity of demand will be ''zero'' i.e. if the price of one good changes, there will be no change in demand for the other good.

{|
|[[Image:Cross elasticity of demand complements.svg|thumb|upright|200px|Two goods that complement each other show a negative cross elasticity of demand: as the price of good Y rises, the demand for good X falls]]
|[[Image:Cross elasticity of demand substitutes.svg|thumb|upright|200px|Two goods that are substitutes have a positive cross elasticity of demand: as the price of good Y rises, the demand for good X rises]]
|[[Image:Cross elasticity of demand independent.svg|thumb|upright|200px|Two goods that are independent have a zero cross elasticity of demand: as the price of good Y rises, the demand for good X stays constant]]
|}

When goods are substitutable, the diversion ratio, which quantifies how much of the displaced demand for product ''j'' switches to product ''i'', is measured by the ratio of the cross-elasticity to the own-elasticity multiplied by the ratio of product ''i''{{'}}s demand to product ''j''{{'}}s demand.  In the discrete case, the diversion ratio is naturally interpreted as the fraction of product ''j'' demand which treats product ''i'' as a second choice,<ref>{{Cite journal|jstor = 1391869|title = Relating Elasticities to Changes in Demand|last1 = Bordley|first1 = Robert F.|journal = Journal of Business & Economic Statistics|year = 1985|volume = 3|issue = 2|pages = 156–158| doi=10.2307/1391869 }}</ref><ref>Capps, O. and Dharmasena, S., "Enhancing the Teaching of Product Substitutes/Complements: A Pedagogical Note on Diversion Ratios",''Applied Economics Teaching Resources'', Vol. 1, Issue 1, pp. 32–45, (2019), https://www.aaea.org/UserFiles/file/AETR_2019_001ProofFinal_v1.pdf</ref> measuring how much of the demand diverting from product ''j'' because of a price increase is diverted to product ''i'' can be written as the product of the ratio of the cross-elasticity to the own-elasticity and the ratio of the demand for product ''i'' to the demand for product ''j''.  In some cases, it has a natural interpretation as the proportion of people buying product ''j'' who would consider product ''i'' their "second choice".

Approximate estimates of the cross price elasticities of preference-independent bundles of goods (e.g. food and education, healthcare and clothing, etc.) can be calculated from the income elasticities of demand and market shares of individual bundles, using established models of demand based on a differential approach.<ref>{{Cite journal|doi=10.1371/journal.pone.0151390|title=Relationship between the Uncompensated Price Elasticity and the Income Elasticity of Demand under Conditions of Additive Preferences|year=2016|last1=Sabatelli|first1=Lorenzo|journal=PLOS ONE|volume=11|issue=3|pages=e0151390|pmid=26999511|pmc=4801373|arxiv=1602.08644|bibcode=2016PLoSO..1151390S|doi-access=free}}</ref>

===Selected cross price  elasticities of demand===
Below are some examples of the cross-price elasticity of demand (XED) for various goods:<ref>Frank (2008) p. 186.</ref>
{| class="wikitable"
|-
! Good !! Good with price change !! XED
|-
| Butter || Margarine || +0.81
|-
| Beef || Pork || +0.28
|-
| Entertainment || Food || −0.72
|}