The effect of the demand for product A caused by a change in the price of a product B is called?
cross-elasticity of demand
elasticity of supply
competitive demand
composite demand
joint demand
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The answer is A.
cross elasticity of demand can be defined as a degree of responsiveness of a change in the quantity demanded of commodityX to a change in the price of commodityY
My answer is competitive demand, it is when a commodity is wanted to satisfy a want in place of another similar commodity and these only applies to commodities that have close substitutes, i.e Butter is too expensive that why we mostly go for margarine. So the effects on the demand for Margarine caused by a change in the price of Butter is "competitive demand".
The answer is right because Cross elasticity of demand is the percentage change in the quantity demanded of commodity A relative to a Percentage change in the Price of commodity B. Cross elasticity of demand applies mainly to goods that have close substitutes as well as complementary goods.
Here is an explanation:
cross elasticity of demand is the degree of responsiveness of demand of good A as a result of change in of price of good B.
REF: check essential economics/ fundamental economics under the topic elasticity of demand
d answer is correct because cross elasticity of dd occurs wen 2 commodities are substitute 4 one anoda & therefore in competitive dd. As d price of one of dem increases with d price of d oda remaining constant, d dd 4 d second commodity will increase since it becomes cheaper dan d first commodity
cross elasticity od demand is when a change in the price of commodity A leads to a change in the demand of commodity B. The relationship between both commodities is that they are competitve/ rival goods
