Question : The cross elasticity of demand assesses how responsively a certain good's quantity desired is to changes in its prices.
Option 1: Its complements but not its substitutes.
Option 2: It's a substitute but not its complement.
Option 3: Its substitutes and complements
Option 4: Neither its substitutes nor its complements
Answer (1)
25th Jan, 2024
Correct Answer: Its substitutes and complements
Solution :
The cross elasticity of demand assesses how responsively consumers purchase one good when the price of another one changes.
It complements and substitutes for other commodities.
Hence option c is the correct answer.
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