ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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If the cross elasticity of demand for product A is zero then product A and Product B are complements
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TRUE
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FALSE
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Either A or B
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None of the above
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Explanation:
Detailed explanation-1: -This refers to the proportionate change in the quantity demanded of one good (say X) with the proportionate change in the price of another good (say Y). If the cross elasticity of demand is zero then it means that there is no relation between the quantity and the price of these two goods.
Detailed explanation-2: -Also, if the cross elasticity of demand equals zero, then the two products are said to be independent, and a change in the price of one product will have no effect on the demand for the other.
Detailed explanation-3: -Unrelated products have zero cross-price elasticity.
Detailed explanation-4: -Items with a coefficient of 0 are unrelated items and are goods independent of each other.
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