Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Micro Economics: Theory of Consumer behaviour

Question:

What is the elasticity of demand called if it measures the responsiveness of the quantity demanded of a good, to change in price of other goods?

Options:

price elasticity of demand

income elasticity of demand

cross elasticity of demand

none of them

Correct Answer:

cross elasticity of demand

Explanation:

Cross elasticity of demand measures the degree of responsiveness in the quantity demanded of one commodity to the change in price of the OTHER commodity. Now this other commodity can be either a substitute good or a complementary good.