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Question
The effect of a change in price of commodity X on the demand for commodity Y is known as ______.
Options
income effect
price effect
cross price effect
none of these
MCQ
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Solution
The effect of a change in price of commodity X on the demand for commodity Y is known as cross price effect.
Explanation:
The cross-price effect describes how a change in the price of one commodity affects demand for another related commodity. The income effect instead concerns changes in purchasing power.
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