Knowing the value of the cross elasticity of demand allows us to distinguish between inferior goods and normal goods.

Question

Quizplus · Accepted Answer

The cross elasticity of demand measures the responsiveness of the quantity demanded for a good to a change in the price of another good, and does not directly relate to distinguishing between inferior and normal goods, which is determined by income elasticity of demand.

Knowing the Value of the Cross Elasticity of Demand Allows