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21 April, 11:09

Cross elasticity of demand measures how sensitive purchases of a specific product are to changes in:

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  1. 21 April, 14:58
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    Answer: Price of related goods

    Explanation:

    Cross elasticity of demand measures how sensitive purchases of a specific product are to changes in the price of related goods. Related goods can be substitutes (used in place of each other) or complements (used together). Cross price elasticity of substitute goods is positive, as a rise in the price of substitute good leads to a rise in the demand for the other substitute good. While, cross price elasticity of complementary goods is negative, a rise in the price of complementary good will lead to a fall in the demand for the other good.
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