Question

Match the items of List - I with those of List - II and indicate the correct code :

Answer 1

a) Substitute goods possess positive cross elasticity since if the price of one commodity rises then the demand for another good also rises and vice versa.

b) Complementary goods possess negative cross elasticity since if the price of one commodity rises then the demand for another good falls and vice versa.

c) Giffen goods possess positive price elasticity since as the income of the consumer rises the demand for Giffen goods also rise and vice-versa.

d) High income group consumption goods possess low price elasticity as high-end consumers does not get affected by the rise of price of the commodity.