Question : The cross-price elasticity of demand is used to determine whether:- a: Product is an inferior or normal good b: A product is a necessity or a luxury c: Two products are substitutes or complements
Option 1: Only A is correct
Option 2: Only A and B are correct
Option 3: Only C correct
Option 4: Only B and C are correct
Correct Answer: Only C correct
Solution : Whether or not products are "substitutes" or "complements" depends on the concept of cross-price elasticity of demand. Products that are expected to compete with one another are grouped together using this term in market definition. Hence option C is the correct answer.
Question : If the cross elasticity of demand between two goods is negative, it means the goods are:
Option 1: Substitutes.
Option 2: Complements.
Option 3: Inferior goods.
Option 4: Normal goods.
Question : If the cross elasticity of demand between two goods is zero, it means the goods are:
Option 3: Independent.
Question : The cross elasticity of demand between CocaCola and PepsiCola is ________ so Coke and Pepsi are ________.
Option 1: Positive; complements
Option 2: Negative; substitutes
Option 3: Negative; complements
Option 4: Positive; substitutes
Question : Which one is not the type of elasticity of demand?
Option 1: Price elasticity of demand
Option 2: Income elasticity of demand
Option 3: Cross elasticity of demand
Option 4: Consumer elasticity of demand
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