The percentage change in the quantity demanded of one commodity resulting from a 1 percent change in the price of a substitute commodity is called the ________ elasticity of demand.
A) income
B) price
C) cross
D) equilibrium
E) arc

Question

Quizplus · Accepted Answer

The definition given in the question matches perfectly with the cross elasticity of demand. It measures the responsiveness of the demand for a product to a change in the price of a substitute good. A positive cross elasticity means that the two goods are substitutes, and the percentage change in quantity demanded for one good is directly related to a percentage change in the price of the other.

The Percentage Change in the Quantity Demanded of One Commodity