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) substitute demand
E) variable demand

Question

Quizplus · Accepted Answer

Cross-elasticity of demand measures the responsiveness of demand for a particular product to changes in the price of another related product. If the demand for one product increases as the price of another product increases, the two products are considered substitutes. If the demand for one product decreases as the price of another product increases, the two products are considered complements.

The Changes in Prices of Other Products Affect the Demand