Question : Which of the following goods is likely to have a positive cross elasticity of demand with bicycles?
Option 1: Bicycle helmets
Option 2: Bicycle repair services
Option 3: Motorcycle helmets
Option 4: Roller skates
Answer (1)
20th Jan, 2024
Correct Answer: Bicycle repair services
Solution : The correct answer is (b) Bicycle repair services
Bicycle repair services are likely to have a positive cross elasticity of demand with bicycles. When the price of bicycles increases, the demand for bicycle repair services is also likely to increase. This is because as the price of bicycles rises, some consumers may choose to repair their existing bicycles instead of purchasing new ones, leading to an increase in demand for repair services.
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