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Question

Cross elasticity of demand between petrol and car is _________.

A
infinite
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B
positive
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C
zero
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D
negative
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Solution

The correct option is C negative
Cross elasticity of demand between petrol and car is negative. Petrol and car are complementary goods as when the price of petrol rises, the demand for car falls. Hence , cross elasticity of demand between petrol and car is negative.

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