1.

What does zero cross elasticity of demand between two goods imply? Give an example to explain.

Answer»

Zero cross elasticity of demand between goods implies that two goods are not related to each other. In other words, the change in the price of one commodity (Y) does not affect the demand for another commodity (X). 

For example: a change in the price of sugar is not likely to influence the demand for a fan. So their cross elasticity of demand will be zero.



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