Cross elasticity of demand between petrol and automobiles is________.
A
infinite
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B
negative
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C
zero
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D
high
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Solution
The correct option is B negative The cross elasticity of demand is economic concept that measures the responsiveness in the quantity demanded of one good when the price for another good changes.
Petrol and automobiles are complementary goods.If the price of petrol increases, the demand for automobiles will decrease and vice- versa.