Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
The responsiveness of quantity demanded of one good to a change in the price of another good
B
The change in demand for a product when consumer income changes
C
The impact of advertising on the demand for a product
D
The change in quantity demanded due to a change in the price of the same product
Understanding the Answer
Let's break down why this is correct
Answer
Cross price elasticity of demand measures how the quantity demanded of one good changes when the price of another good changes. It helps us understand the relationship between two products, showing whether they are substitutes or complements. For example, if the price of coffee rises and people buy more tea instead, the cross price elasticity would be positive, indicating that coffee and tea are substitutes. On the other hand, if the price of printers goes up and people buy fewer ink cartridges, the elasticity would be negative, showing that these products are complements. This concept is important for businesses to know how price changes can affect their sales of related products.
Detailed Explanation
This measures how much the demand for one product changes when the price of another product changes. Other options are incorrect because This option talks about how demand changes when people's income changes; This option suggests that advertising affects demand.
Key Concepts
cross price elasticity definition
Topic
Cross Price Elasticity of Demand
Difficulty
easy level question
Cognitive Level
understand
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