The cross-price elasticity of demand is useful for determining which pairs of commodities serve as substitutes for each other.

Question

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Cross-price elasticity of demand measures the responsiveness of demand for one good to changes in the price of another good. If this elasticity is positive, it suggests that the two goods are substitutes, meaning that the increase in the price of one good leads to an increase in demand for the other good. Therefore, cross-price elasticity of demand is useful in determining which pairs of commodities serve as substitutes for each other.

The Cross-Price Elasticity of Demand Is Useful for Determining Which