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Question

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.
Thus, cross elasticity of demand is negative.
Hence, the correct option is B.

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