The Measure Used to Determine Whether Two Products Are Substitutes

question 123

Multiple Choice

The measure used to determine whether two products are substitutes or complements is called

• A)price elasticity of demand.
• B)income elasticity of demand.
• C)cross elasticity of demand.
• D)inverse elasticity of demand.

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Definitions:

E(X + Y)

The expected value of the sum of two random variables, equal to the sum of their individual expected values.

Covariance

A measure that indicates the extent to which two variables change together, but does not indicate the strength of their relationship.

Independent

Not influenced by or dependent on another variable; in statistics, it often means that the occurrence of one event does not affect the probability of another event.

COV(X,Y)

Covariance between two variables X and Y, measuring the extent to which the variables change together and indicating the direction of their linear relationship.