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Question
Fill in the blank with appropriate alternatives given below:
Cross elasticity of demand is applicable to ____________ goods.
Options
unrelated
substitute
inferior
natural
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Solution
Cross elasticity of demand is applicable to substitute goods.
Explanation:
Cross elasticity of demand is a concept that is with regard to related goods. It is the measurement of the degree of responsiveness of quantity demanded due to change in the price of related goods. As substitute goods are a kind of related goods, cross elasticity of demand is applicable to such goods.
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