The cross-price elasticity of demand measures how the quantity demanded of a good changes:
A)as its price changes
B)as the price of a related good changes
C)as income changes
D)as the slope of the demand curve changes

Question

Quizplus · Accepted Answer

The cross-price elasticity of demand measures how the quantity demanded of a good changes as the price of a related good changes. Therefore, B is the correct answer choice. A is incorrect because it describes the price elasticity of demand. C is incorrect because it describes the income elasticity of demand. D is incorrect because it describes the steepness of the demand curve, which is not directly related to cross-price elasticity of demand.

The Cross-Price Elasticity of Demand Measures How the Quantity Demanded