Which of the following statements correctly describe the implications of cross-price elasticity of demand? Select all that apply.

Cross-price elasticity of demand measures how the quantity demanded of one good changes when the price of another good changes. If two goods are substitutes, like coffee and tea, an increase in the price of coffee might lead to an increase in the demand for tea, resulting in a positive cross-price elasticity. Conversely, if two goods are complements, like bread and butter, an increase in the price of bread could decrease the demand for butter, leading to a negative cross-price elasticity. Understanding this concept helps businesses make pricing decisions and anticipate consumer behavior in relation to other products. For example, if a company sees that the price of a competing snack rises, they might consider lowering their own prices to attract more customers.