Question

If the price of rohu purchased remain unchanged with changes in the price of catla, then the cross elasticity of demand between two fish species is

• A. Positive
• B. Zero
• C. Negative
• D. One

Hint:

- Positive cross-elasticity = Substitute goods (e.g., if price of catla rises, demand for rohu increases).
- Negative cross-elasticity = Complementary goods (e.g., car and fuel).
- Zero cross-elasticity = Independent goods (no relationship).

Answer 1

The Correct Option is B

Step 1: Understanding the Concept:
Cross elasticity of demand measures the responsiveness of the quantity demanded of one good (e.g., rohu) to a change in the price of another good (e.g., catla).

Step 2: Detailed Explanation:
If two goods are completely independent (not substitutes or complements), a change in the price of one will have no effect on the demand for the other.
In this scenario, since the quantity of rohu purchased remains unchanged regardless of fluctuations in the price of catla, the cross elasticity of demand is zero.
If they were active substitutes (which they often are in reality, but not in this specific problem scenario), the cross elasticity would be positive.

Step 3: Final Answer:
The cross elasticity is Zero, corresponding to option (B).