Site navigation

Which of the following may measure the degree of interdependence of firms?

Quantity cross elasticity measures interdependence between firms by relating a change in one firm's output to the resulting change in another firm's price. Price cross…

Choose your answer

Which of the following may measure the degree of interdependence of firms?

Select one answer
Answer and explanation

Correct answer B

Quantity cross elasticity measures interdependence between firms by relating a change in one firm's output to the resulting change in another firm's price. Price cross elasticity instead measures the substitutability of their products through the response of demand to another product's price. Employment and factor-use elasticities do not provide this measure of firms' market interdependence.

Practice for these exams

  • Jammu & Kashmir and Ladakh SET (JKSET/LASET)

Related question papers

Related exam syllabi

Related questions in this topic