Question : The cross-price elasticity of demand is used to determine whether:-
a: Product is an inferior or normal good
b: A product is a necessity or a luxury
c: Two products are substitutes or complements
Option 1: Only A is correct
Option 2: Only A and B are correct
Option 3: Only C correct
Option 4: Only B and C are correct
Correct Answer: Only C correct
Solution :
Whether or not products are "substitutes" or "complements" depends on the concept of cross-price elasticity of demand. Products that are expected to compete with one another are grouped together using this term in market definition.
Hence option C is the correct answer.
Related Questions
Question : If the cross elasticity of demand between two goods is negative, it means the goods are:
Question : If the cross elasticity of demand between two goods is zero, it means the goods are:
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