Cross-price elasticity refers to
A)How responsive consumers are to a change in price.
B)How responsive consumers are to a change in income.
C)How responsive consumers of one good are to a change in the price of another good.

Question

Quizplus · Accepted Answer

Cross-price elasticity measures how sensitive (or responsive) the demand for one good is to a change in the price of another good. It tells us how substitutable two goods are. If the cross-price elasticity is positive, it means that the two goods are substitutes, and a price increase in one good will lead to an increase in demand for the other good (and vice versa). If the cross-price elasticity is negative, it means that the two goods are complements, and a price increase in one good will lead to a decrease in demand for the other good (and vice versa).

Cross-Price Elasticity Refers to