2009•The American EconomistRequires access
Cross Price Elasticity and Income Elasticity of Demand: Are Your Students Confused?
Philip E. Graves, Robert L. Sexton
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Abstract
The authors demonstrate that most textbooks are ambiguous at best in their treatment of cross price and income elasticity of demand. There is also no discussion of what initiates a price increase in discussions of substitutes and complements in the textbooks examined. The authors offer a remedy for these deficiencies.