In economics, the cross elasticity of demandor cross-price elasticity of DEMAND measures the responsiveness of the quantity demanded for a good to a CHANGE in the price of another good, ceteris paribus. It is measured as the percentage change in quantity demanded for the first good that occurs in RESPONSE to a percentage change in price of the second good. For example, if, in response to a 10% increase in the price of fuel, the demand for new cars that are fuel inefficient decreased by 20%, the cross elasticity of demand would be:cross body {\displaystyle {\frac {-20\%}{10\%}}=-2} A negative cross elasticity denotes two products that are complements, while a positive cross elasticity denotes two substitute products. Assume products A and B are complements, meaning that an increase in the price for A accompanies a decrease in the quantity demanded for B. Therefore, if the price of product B decreases, the demand curve for product A shifts to the right reflecting an increase in A's demand, resulting in a negativevalue for the cross elasticity of demand. The exact OPPOSITE reasoning holds for substitutes.

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