Question : If the cross elasticity of demand between two goods is zero, it means the goods are:
Option 1: Substitutes.
Option 2: Complements.
Option 3: Independent.
Option 4: Normal goods.
Correct Answer: Independent.
Solution : The correct answer is (c) Independent.
Cross elasticity of demand measures the responsiveness of the quantity demanded of one good to changes in the price of another good. When the cross elasticity of demand is zero, it indicates that the two goods are not related in terms of consumer demand. Changes in the price of one good do not have an impact on the quantity demanded of the other good. This suggests that the goods are independent, meaning that they are not substitutes or complements. Consumers' preferences or purchasing decisions for one good do not depend on the price or availability of the other good.
