The measure used to determine whether two products are substitutes or complements is called the:
A)price elasticity of demand.
B)income elasticity of demand.
C)cross-price elasticity of demand.
D)inverse elasticity of demand.

Question

The measure used to determine whether two products are substitutes or complements is called the:
A)​price elasticity of demand.
B)​income elasticity of demand.
C)​cross-price elasticity of demand.
D)​inverse elasticity of demand.

Quizplus · Accepted Answer

The measure used to determine whether two products are substitutes or complements is known as cross-price elasticity of demand. Cross-price elasticity of demand measures the responsiveness of the demand for one product to the change in the price of another product. Substitutes have a positive cross-price elasticity, while complements have a negative cross-price elasticity. Hence, option C is the correct choice.

The Measure Used to Determine Whether Two Products Are Substitutes