Proof: Budget constrain is written as

Thus, weighted sum of cross price elasticities and own price elasticity equals one. Further, if e11 1, then cross price elasticity is positive and the goods are substitutes.

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# What is the Relationship between “Own Price Elasticity” and “Cross Price Elasticity”?

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Proof: Budget constrain is written as

Thus, weighted sum of cross price elasticities and own price elasticity equals one. Further, if e11 1, then cross price elasticity is positive and the goods are substitutes.

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