To determine whether McDonald's hamburgers are in the same market as Domino's pizza ,the criterion we use is their
A) price elasticities of demand
B) price elasticities of supply
C) income elasticities of demand
D) cross elasticities
E) equilibrium prices

Question

Quizplus · Accepted Answer

The correct criterion to determine whether McDonald's hamburgers are in the same market as Domino's pizza is their cross elasticities. Cross elasticity of demand measures how the quantity demanded of one good responds to a change in the price of another good. If the cross elasticity between McDonald's hamburgers and Domino's pizza is high, it suggests that they are close substitutes and thus in the same market.

To Determine Whether McDonald's Hamburgers Are in the Same Market