The percentage change in the quantity of one product demanded compared with the percentage change in price in another product is called -price elasticity.
Question
The percentage change in the quantity of one product demanded compared with the percentage change in price in another product is called -price elasticity.
Solution
The statement is not entirely correct. The percentage change in the quantity of one product demanded compared with the percentage change in price in another product is called "cross-price elasticity of demand", not "price elasticity".
Price elasticity, also known as price elasticity of demand, refers to the percentage change in quantity demanded of a product due to a percentage change in its own price.
On the other hand, cross-price elasticity of demand measures how the quantity demanded of a product responds to a change in the price of another product. It is used to see how closely related two products are. If the cross-price elasticity of demand is positive, the two products are substitutes. If it is negative, the two products are complements.
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