Final answer:
The concept in question is elasticity of demand, which measures how changes in price influence consumer purchasing patterns. Cross-price elasticity specifically looks at how the price change of one good affects the demand for another, with substitute goods having positive elasticities and complement goods having negative ones.a) Elasticity of demand
Step-by-step explanation:
The measure of how people change their buying patterns when prices change is known as elasticity of demand. Elasticity of demand is central in understanding how changes in price can influence the quantity demanded of a product. For example, certain products have higher elasticity, meaning consumers will be more responsive to price changes, often resulting in a significant change in the quantity demanded. On the other hand, products deemed as necessities tend to have inelastic demand, showing little change in quantity demanded with a change in price.
Cross-price elasticity of demand is a specific type of elasticity that measures how the demand for one good (good A) changes in response to a price change of another good (good B). For substitute goods, like coffee and tea, an increase in the price of one results in an increase in demand for the other. Conversely, complement goods, like golf clubs and golf balls, will see a decrease in demand for one if the price of the other increases.