Cross-price elasticity measures how the quantity demanded of one good responds to a change in the price of another good. This concept is crucial in understanding consumer behavior and market dynamics, as it can indicate whether two goods are substitutes or complements. A positive cross-price elasticity suggests that an increase in the price of one good leads to an increase in the quantity demanded of the other, while a negative value indicates that the goods are complements, meaning that as one price rises, the quantity demanded for the other falls.
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