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.