Question: The cross elasticity of demand between 2 products is infinite, it is case of
Options:
Monopoly
Oligopoly slope
Monopolistic
Perfect competition
📌 Other Options Explanations:
-Monopoly: A single seller dominates the market.
-Oligopoly: Few sellers dominate the market, often with differentiated products.
-Monopolistic competition: Many sellers offer differentiated products, with some control over price.
🔑Key Points:
• Cross price Elasticity:
-Cross price elasticity of demand is a measure of how responsive a good's demand is to a change in the price of a related good.
-It is always expressed as a percentage.
-The cross elasticity of demand for substitute goods is always positive because the demand for one good increases when the price for the substitute good increases.
-Alternatively, the cross elasticity of demand for complementary goods is negative
• Cross price elasticity of Complementary goods:
-The demand for complementary items will have a negative cross elasticity.
-When the price of one commodity rises, demand for the other two goods falls.