Cross elasticity of demand

A measure of the responsiveness in the quantity demand of one good when a change in price takes place in another good (eg substitute good or complement).

Cross elasticity
= % change in quantity demanded of good X / % change in price of good Y
= (ΔQx/ ΔPy)[(PX1+PX2)/(QX1+QX2)]

Interpretations from the value cross elasticity
If +ve,
Two goods are substitute, e.g. ice-cream and frozen yogurt

If –ve,
Two goods are complement, e.g. autos and gosaline