The changes in prices of other products affect the demand for an item.This is a phenomenon called ________.
A)cross-elasticity of demand
B)complementary elasticity
C)interdependent elasticity
D)parallel elasticity
E)variable demand

Question

Quizplus · Accepted Answer

Cross-elasticity of demand refers to the change in demand for a particular product due to the change in price of a related product. For example, if the price of coffee increases, the demand for tea may increase as consumers switch to a cheaper alternative. Therefore, changes in prices of other products affect the demand for an item through cross-elasticity of demand.

The Changes in Prices of Other Products Affect the Demand