CA Foundation Exam > CA Foundation Questions > When the numerical value of cross elasticity ...
Start Learning for Free
When the numerical value of cross elasticity between two goods is very high, it means a) The goods are perfect complements and therefore have to be used together. b) The goods are perfect substitutes and can be used with ease in place of one another. c) There is a high degree of substitutability between the two goods. d) The goods are neutral and therefore cannot be considered as substitutes.?
Most Upvoted Answer
When the numerical value of cross elasticity between two goods is very...
High Cross Elasticity between Two Goods
Cross elasticity of demand measures the responsiveness of the quantity demanded of one good to a change in the price of another good. When the numerical value of cross elasticity between two goods is very high, it means:
Substitutability between Two Goods
The goods are highly substitutable, which implies that consumers can easily switch from one good to another in response to a change in their relative prices. This is because a change in the price of one good will have a significant impact on the demand for the other good.
Perfect Substitutes
If the cross elasticity between two goods is infinite, it means that the goods are perfect substitutes. Consumers can use either of the goods with ease in place of one another, and their demand for the goods is interchangeable.
High Degree of Substitutability
If the cross elasticity between two goods is greater than 1, it means that the goods are highly substitutable. Consumers can easily switch from one good to another, and a change in the price of one good will have a significant impact on the demand for the other good.
Neutral Goods
If the cross elasticity between two goods is zero, it means that the goods are neutral, and therefore cannot be considered as substitutes. A change in the price of one good will not have any impact on the demand for the other good.
Conclusion
In summary, the numerical value of cross elasticity between two goods provides information about the substitutability of the goods. When the cross elasticity is very high, it means that the goods are highly substitutable, and consumers can easily switch from one good to another.
Cross elasticity of demand measures the responsiveness of the quantity demanded of one good to a change in the price of another good. When the numerical value of cross elasticity between two goods is very high, it means:
Substitutability between Two Goods
The goods are highly substitutable, which implies that consumers can easily switch from one good to another in response to a change in their relative prices. This is because a change in the price of one good will have a significant impact on the demand for the other good.
Perfect Substitutes
If the cross elasticity between two goods is infinite, it means that the goods are perfect substitutes. Consumers can use either of the goods with ease in place of one another, and their demand for the goods is interchangeable.
High Degree of Substitutability
If the cross elasticity between two goods is greater than 1, it means that the goods are highly substitutable. Consumers can easily switch from one good to another, and a change in the price of one good will have a significant impact on the demand for the other good.
Neutral Goods
If the cross elasticity between two goods is zero, it means that the goods are neutral, and therefore cannot be considered as substitutes. A change in the price of one good will not have any impact on the demand for the other good.
Conclusion
In summary, the numerical value of cross elasticity between two goods provides information about the substitutability of the goods. When the cross elasticity is very high, it means that the goods are highly substitutable, and consumers can easily switch from one good to another.
Community Answer
When the numerical value of cross elasticity between two goods is very...
As we know, Cross elasticity of demand is observed with substitutes or with complementarities . As mentioned in the question, cross elasticity of demand between two goods is very high i.e., quantity demanded is very much influenced by a very small change in price of related goods. So we can say that these goods are perfect substitutes and they can be used with ease in place of one another. Therefore answer is option B
Attention CA Foundation Students!
To make sure you are not studying endlessly, EduRev has designed CA Foundation study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in CA Foundation.
|
Explore Courses for CA Foundation exam
|
|
Similar CA Foundation Doubts
Top Courses for CA FoundationView all
When the numerical value of cross elasticity between two goods is very high, it means a) The goods are perfect complements and therefore have to be used together. b) The goods are perfect substitutes and can be used with ease in place of one another. c) There is a high degree of substitutability between the two goods. d) The goods are neutral and therefore cannot be considered as substitutes.?
Question Description
When the numerical value of cross elasticity between two goods is very high, it means a) The goods are perfect complements and therefore have to be used together. b) The goods are perfect substitutes and can be used with ease in place of one another. c) There is a high degree of substitutability between the two goods. d) The goods are neutral and therefore cannot be considered as substitutes.? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about When the numerical value of cross elasticity between two goods is very high, it means a) The goods are perfect complements and therefore have to be used together. b) The goods are perfect substitutes and can be used with ease in place of one another. c) There is a high degree of substitutability between the two goods. d) The goods are neutral and therefore cannot be considered as substitutes.? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for When the numerical value of cross elasticity between two goods is very high, it means a) The goods are perfect complements and therefore have to be used together. b) The goods are perfect substitutes and can be used with ease in place of one another. c) There is a high degree of substitutability between the two goods. d) The goods are neutral and therefore cannot be considered as substitutes.?.
When the numerical value of cross elasticity between two goods is very high, it means a) The goods are perfect complements and therefore have to be used together. b) The goods are perfect substitutes and can be used with ease in place of one another. c) There is a high degree of substitutability between the two goods. d) The goods are neutral and therefore cannot be considered as substitutes.? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about When the numerical value of cross elasticity between two goods is very high, it means a) The goods are perfect complements and therefore have to be used together. b) The goods are perfect substitutes and can be used with ease in place of one another. c) There is a high degree of substitutability between the two goods. d) The goods are neutral and therefore cannot be considered as substitutes.? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for When the numerical value of cross elasticity between two goods is very high, it means a) The goods are perfect complements and therefore have to be used together. b) The goods are perfect substitutes and can be used with ease in place of one another. c) There is a high degree of substitutability between the two goods. d) The goods are neutral and therefore cannot be considered as substitutes.?.
Solutions for When the numerical value of cross elasticity between two goods is very high, it means a) The goods are perfect complements and therefore have to be used together. b) The goods are perfect substitutes and can be used with ease in place of one another. c) There is a high degree of substitutability between the two goods. d) The goods are neutral and therefore cannot be considered as substitutes.? in English & in Hindi are available as part of our courses for CA Foundation.
Download more important topics, notes, lectures and mock test series for CA Foundation Exam by signing up for free.
Here you can find the meaning of When the numerical value of cross elasticity between two goods is very high, it means a) The goods are perfect complements and therefore have to be used together. b) The goods are perfect substitutes and can be used with ease in place of one another. c) There is a high degree of substitutability between the two goods. d) The goods are neutral and therefore cannot be considered as substitutes.? defined & explained in the simplest way possible. Besides giving the explanation of
When the numerical value of cross elasticity between two goods is very high, it means a) The goods are perfect complements and therefore have to be used together. b) The goods are perfect substitutes and can be used with ease in place of one another. c) There is a high degree of substitutability between the two goods. d) The goods are neutral and therefore cannot be considered as substitutes.?, a detailed solution for When the numerical value of cross elasticity between two goods is very high, it means a) The goods are perfect complements and therefore have to be used together. b) The goods are perfect substitutes and can be used with ease in place of one another. c) There is a high degree of substitutability between the two goods. d) The goods are neutral and therefore cannot be considered as substitutes.? has been provided alongside types of When the numerical value of cross elasticity between two goods is very high, it means a) The goods are perfect complements and therefore have to be used together. b) The goods are perfect substitutes and can be used with ease in place of one another. c) There is a high degree of substitutability between the two goods. d) The goods are neutral and therefore cannot be considered as substitutes.? theory, EduRev gives you an
ample number of questions to practice When the numerical value of cross elasticity between two goods is very high, it means a) The goods are perfect complements and therefore have to be used together. b) The goods are perfect substitutes and can be used with ease in place of one another. c) There is a high degree of substitutability between the two goods. d) The goods are neutral and therefore cannot be considered as substitutes.? tests, examples and also practice CA Foundation tests.
|
|
Explore Courses for CA Foundation exam
|
|
Suggested Free Tests
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
|
© EduRev
|
Education Revolution
|
Follow Us
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup