The correct option is A. cross-elasticity of demand. Explanation of the Correct Answer Cross-elasticity of demand measures how the quantity demanded of one product (Product A) responds to a change in the price of another product (Product B). This concept is particularly important in understanding the relationship between substitute goods and complementary goods.

1. Definition: Cross-elasticity of demand is defined mathematically as: [ E_{AB} = \frac{\%\ \text{Change in Quantity Demanded of Product A}}{\%\ \text{Change in Price of Product B}} ]
2. If the value of (E_{AB}) is positive, it indicates that Product A and Product B are substitutes (i.e., an increase in the price of Product B leads to an increase in the quantity demanded of Product A).
3. If the value is negative, it indicates that they are complements (i.e., an increase in the price of Product B leads to a decrease in the quantity demanded of Product A).
4. Application: For example, if the price of coffee (Product B) increases, and as a result, the quantity demanded for tea (Product A) increases, this indicates that coffee and tea are substitute goods. The cross-elasticity of demand would be calculated to quantify this relationship.

Why the Other Options Are Incorrect B. Elasticity of supply: - This term refers to the responsiveness of the quantity supplied of a good to a change in its price. It does not relate to the demand for one product in response to the price change of another product. Therefore, this option is not relevant to the question. C. Competitive demand: - Competitive demand refers to the situation where two or more goods satisfy the same need or want, and consumers can choose between them. While it relates to the concept of substitutes, it does not specifically address the effect of price changes on demand, which is what cross-elasticity does. Thus, this option is too broad and does not capture the specific relationship described in the question. D. Composite demand: - Composite demand occurs when a good is demanded for multiple uses. For example, if a product like oil is used for both fuel and manufacturing, it has composite demand. This term does not relate to the interaction between two different products' prices and their demand, making it irrelevant to the question. Summary of Key Points

• Cross-elasticity of demand measures how the demand for one product changes in response to the price change of another product.
• A positive cross-elasticity indicates substitute goods, while a negative value indicates complementary goods.
• Elasticity of supply, competitive demand, and composite demand do not accurately describe the relationship between the demand for one product and the price of another.

Revision Summary

• Cross-elasticity of demand quantifies the relationship between the demand for one product and the price of another.
• Positive cross-elasticity indicates substitutes; negative indicates complements.
• Elasticity of supply and competitive/composite demand do not address the price-demand relationship between two different products.