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When cross elasticity of demand is a large positive number, one can conclude that

A. The good is normal

B. The good is inferior

C. The good is a substitute

D. The good is complement

Answer: Option C

Solution(By Examveda Team)

When cross elasticity of demand is a large positive number, one can conclude that the good is complement. Two goods that complement each other have a negative cross elasticity of demand: as the price of good Y rises, the demand for good X falls.

This Question Belongs to Commerce >> Economics

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Comments ( 4 )

  1. Eldanb Biliz
    Eldanb Biliz :
    7 months ago

    Go for explanation.

  2. Saurav Gaurav
    Saurav Gaurav :
    11 months ago

    As per explanation option D is the right ans

  3. Abdul Bari
    Abdul Bari :
    4 years ago

    Answer shows as option C and explanation says about option D

  4. Abdul Bari
    Abdul Bari :
    4 years ago

    The answer shows as option C...which is the good is a substitute
    but the explanation is correct.

Related Questions on Economics

Which among the following statement is INCORRECT?

A. On a linear demand curve, all the five forms of elasticity can be depicted

B. If two demand curves are linear and intersecting each other, then, coefficient of elasticity would be same on different demand curves at the point of intersection.

C. If two demand curves are linear and parallel to each other, then, at a particular price, the coefficient of elasticity would be different on different demand curves.

D. The price elasticity of demand is expressed in terms of relaive not absolute changes in Price and Quantity demanded.