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Question

When the demand for a commodity depends on the effect of a change in the price of a related commodity, it is called



Your Answer
A

Income effect

Your Answer
B

Joint effect

Correct Answer
C

Cross price effect

Your Answer
D

Price effect


Solution

The correct option is D

Cross price effect


When the demand for a commodity depends on the effect of a change in price of a related commodity, it is called cross price effect. Here the goods are said to be related and the demand for one changes in response to change in price of the other.  

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