measures the percentage change in the quantity of good x resulting from a percentage change in the price of good y. A. Price elasticity of demand. B. Price elasticity of supply. C. Cross price elasticity. D. Income elasticity. E. Eta elasticity.

• The correct answer is C.) Cross price elasticity.

Cross price elasticity of demand: It is defined as the measure of the degree of responsiveness of demand for one product say X to the percentage changes in the price of a related commodity say Y. For substitutes elasticity of two goods is positive while complements goods their elasticity is negative. For independent products, their elasticity is zero.

The higher the positive value of cross-price elasticity of demand for the case of substitutes the higher the degree of substitutability. The size of cross elasticity shows the strength of the relationship between the goods.

A.) Price elasticity of demand: It refers to the measure of the degree of responsiveness of quantity demanded to changes in its own cost.

B.) Price elasticity of supply: Measure the degree of responsiveness of a product supplied to change in the goods own price.

D.) Income elasticity: Shows the percentage to which quantity demanded changes in response to the income of an individual.