Managerial Economicsintermediate
Match each elasticity measure with the relationship it measures.
Answer
Price elasticity of demand - Quantity demanded and the good's own price, Income elasticity of demand - Quantity demanded and income, Cross-price elasticity of demand - Demand for one good and another good's price
Explanation
### The pairs
| Item | Matches | Why |
|---|---|---|
| Price elasticity of demand | Quantity demanded and the good's own price | It measures how responsive quantity demanded is to a change in that good's own price. |
| Income elasticity of demand | Quantity demanded and income | It measures how responsive demand is when buyer income changes. |
| Cross-price elasticity of demand | Demand for one good and another good's price | It measures whether a price change in one good affects demand for a different good. |
### Remember
The variable named after “elasticity” identifies what changes to explain demand's response.
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