Cross Elasticity of Demand Measures How Sensitive Purchases of a Specific

question 358

Multiple Choice

Cross elasticity of demand measures how sensitive purchases of a specific product are to changes in

• A)the price of some other product.
• B)the price of that same product.
• C)income.
• D)the general price level.

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Definitions:

Market Equilibrium

A condition or state in an economy where supply and demand are equal, leading to stable prices and quantities.

Units Bought

The quantity of a product that consumers purchase at a given price.

Tax Imposed

A financial charge or other levy instituted by a government on an individual or an entity to raise revenue for public purposes.

Deadweight Loss

An economic efficiency loss that occurs when market equilibrium is not achieved or when externalities are present, leading to a loss of total welfare.