The figure given below shows the demand curves for five products: A, B, C, D, and E.Figure 6.1

-Suppose the manager of a store wants to know whether the product of the store across the street is a substitute for her product. In other words, she would need to know if the _____ for the products is positive.
A)cross-price elasticity of demand
B)price elasticity of demand
C)income elasticity of demand
D)price elasticity of supply
E)cross-price elasticity of supply

Question

The figure given below shows the demand curves for five products: A, B, C, D, and E.Figure 6.1
 
-Suppose the manager of a store wants to know whether the product of the store across the street is a substitute for her product. In other words, she would need to know if the _____ for the products is positive.
A)cross-price elasticity of demand 
B)price elasticity of demand 
C)income elasticity of demand 
D)price elasticity of supply 
E)cross-price elasticity of supply

Quizplus · Accepted Answer

Cross-price elasticity of demand helps to determine whether two products are substitutes or complements. A positive cross-price elasticity of demand indicates that the products are substitutes, as an increase in the price of one product leads to an increase in the demand for the other product.

The Figure Given Below Shows the Demand Curves for Five