Economics • Economic BasicsEasy
Which of the following measures the responsiveness of the quantity demanded of one good to a change in the price of another good?
A. Price Elasticity of Demand
B. Income Elasticity of Demand
C. Cross-Price Elasticity of Demand✓ Correct Answer
D. Advertising Elasticity of Demand
💡 Solution & Explanation
Cross-price elasticity of demand evaluates how the quantity demanded of one good changes in response to price fluctuations in another related good. Price elasticity measures responsiveness to its own price change, whereas income elasticity looks at consumer earnings. Positive cross-price elasticity indicates substitute goods, while negative indicates complements.
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