The percent change in the quantity of one commodity demanded divided by the percent change in the price of another commodity is the
A)price elasticity of demand
B)price elasticity of supply
C)income elasticity of demand
D)income elasticity of supply
E)cross-price elasticity of demand

Question

Quizplus · Accepted Answer

The percent change in the quantity of one commodity demanded divided by the percent change in the price of another commodity is the cross-price elasticity of demand. This measures the responsiveness of the demand for one good to the change in the price of another good. It is calculated by dividing the percent change in the quantity demanded of a good by the percent change in the price of another good. This measure helps firms understand how the demand for one good is affected by changes in the price of another good.

The Percent Change in the Quantity of One Commodity Demanded