1.2 Understanding elasticity and what determines its magnitude helps us understand how an economy is likely to respond to the ever-changing circumstances of the real world. In terms of this statement, explain, with the aid of examples, the type of elasticity that a business owner can use to determine whether the good that his firm is producing is a complement or substitute good. Include in your answer a discussion of the fact that a major determinant of cross elasticity of demand is the degree of closeness that the second good serves as a substitute or complement good to the first good.