The correct answer is: A. Cross Elasticity of Demand
Cross elasticity of demand is a measure of the responsiveness of the quantity demanded of one good to a change in the price of another good. It is calculated as the percentage change in the quantity demanded of good A divided by the percentage change in the price of good B.
A positive cross elasticity of demand indicates that the two goods are substitutes. This means that if the price of good B increases, consumers will demand more of good A, as it is now a relatively cheaper option.
A negative cross elasticity of demand indicates that the two goods are complements. This means that if the price of good B increases, consumers will demand less of good A, as it is now a relatively more expensive option.
Price elasticity of demand is a measure of the responsiveness of the quantity demanded of a good to a change in its own price. It is calculated as the percentage change in the quantity demanded divided by the percentage change in the price.
A high price elasticity of demand indicates that consumers are very responsive to changes in price. This means that a small change in price will lead to a large change in quantity demanded.
A low price elasticity of demand indicates that consumers are not very responsive to changes in price. This means that a large change in price will lead to a small change in quantity demanded.
Substitution elasticity of demand is a measure of the responsiveness of the quantity demanded of a good to a change in the price of a substitute good. It is calculated as the percentage change in the quantity demanded of good A divided by the percentage change in the price of good B.
A high substitution elasticity of demand indicates that there are many close substitutes for good A. This means that if the price of good A increases, consumers will easily switch to a substitute good.
A low substitution elasticity of demand indicates that there are few close substitutes for good A. This means that if the price of good A increases, consumers will have a hard time finding a substitute good.