CA Foundation Exam > CA Foundation Questions > Cross elasticity of complementary goods is:a)...
Start Learning for Free
Cross elasticity of complementary goods is:
- a)Positive
- b)Negative
- c)Infinity
- d)None of these.
Correct answer is option 'B'. Can you explain this answer?
| FREE This question is part of | Download PDF Attempt this Test |
Verified Answer
Cross elasticity of complementary goods is:a)Positiveb)Negativec)Infin...
The cross-price elasticity may be a positive or negative value, depending on whether the goods are complements or substitutes. If two products are complements, an increase in demand for one is accompanied by an increase in the quantity demanded of the other. For example, an increase in demand for cars will lead to an increase in demand for fuel. If the price of the complement falls, the quantity demanded of the other good will increase. The value of the cross-price elasticity for complementary goods will thus be negative.
View all questions of this test
Most Upvoted Answer
Cross elasticity of complementary goods is:a)Positiveb)Negativec)Infin...
Cross elasticity of complementary goods is negative.
Explanation:
Cross elasticity of demand measures the responsiveness of the quantity demanded of a good to a change in the price of another good. Complementary goods are those goods that are consumed together, such as bread and butter, or smartphones and phone cases.
When the price of one complementary good increases, the demand for the other complementary good decreases. This means that the cross elasticity of demand between complementary goods is negative.
For example, if the price of smartphones increases, the demand for phone cases will decrease since people will be less likely to buy a phone case if they can't afford the phone itself. Similarly, if the price of bread increases, the demand for butter will decrease since people will be less likely to buy butter if they can't afford bread.
Therefore, the correct answer is option B, negative.
Explanation:
Cross elasticity of demand measures the responsiveness of the quantity demanded of a good to a change in the price of another good. Complementary goods are those goods that are consumed together, such as bread and butter, or smartphones and phone cases.
When the price of one complementary good increases, the demand for the other complementary good decreases. This means that the cross elasticity of demand between complementary goods is negative.
For example, if the price of smartphones increases, the demand for phone cases will decrease since people will be less likely to buy a phone case if they can't afford the phone itself. Similarly, if the price of bread increases, the demand for butter will decrease since people will be less likely to buy butter if they can't afford bread.
Therefore, the correct answer is option B, negative.
Free Test
FREE
| Start Free Test |
Community Answer
Cross elasticity of complementary goods is:a)Positiveb)Negativec)Infin...
Complementary Two goods that substitute each other have a negative cross elasticity of demand the price of goods Y rises, the demand for goods X falls. A positive cross price elasticity value indicates that the two goods are substitutes
example car and fuel
pen and ink
example car and fuel
pen and ink
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
Cross elasticity of complementary goods is:a)Positiveb)Negativec)Infinityd)None of these.Correct answer is option 'B'. Can you explain this answer?
Question Description
Cross elasticity of complementary goods is:a)Positiveb)Negativec)Infinityd)None of these.Correct answer is option 'B'. Can you explain this answer? 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 Cross elasticity of complementary goods is:a)Positiveb)Negativec)Infinityd)None of these.Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Cross elasticity of complementary goods is:a)Positiveb)Negativec)Infinityd)None of these.Correct answer is option 'B'. Can you explain this answer?.
Cross elasticity of complementary goods is:a)Positiveb)Negativec)Infinityd)None of these.Correct answer is option 'B'. Can you explain this answer? 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 Cross elasticity of complementary goods is:a)Positiveb)Negativec)Infinityd)None of these.Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Cross elasticity of complementary goods is:a)Positiveb)Negativec)Infinityd)None of these.Correct answer is option 'B'. Can you explain this answer?.
Solutions for Cross elasticity of complementary goods is:a)Positiveb)Negativec)Infinityd)None of these.Correct answer is option 'B'. Can you explain this answer? 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 Cross elasticity of complementary goods is:a)Positiveb)Negativec)Infinityd)None of these.Correct answer is option 'B'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of
Cross elasticity of complementary goods is:a)Positiveb)Negativec)Infinityd)None of these.Correct answer is option 'B'. Can you explain this answer?, a detailed solution for Cross elasticity of complementary goods is:a)Positiveb)Negativec)Infinityd)None of these.Correct answer is option 'B'. Can you explain this answer? has been provided alongside types of Cross elasticity of complementary goods is:a)Positiveb)Negativec)Infinityd)None of these.Correct answer is option 'B'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice Cross elasticity of complementary goods is:a)Positiveb)Negativec)Infinityd)None of these.Correct answer is option 'B'. Can you explain this answer? 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