Multiple choice

In which of the following type of market the cross elasticity of demand is zero?

  1. Oligopsony

  2. Oligopoly

  3. Monopoly

  4. Perfect Competition
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

 It is in Monopoly. In monopoly there is a single producer of a product or service and there are no substitutes of a product or service. Hence if the monopolist increases the price of its product, the consumer cannot demand for its substitutes. For example to travel by rail transport in India, the traveller has no other option but to travel in Indian Railways whether the ticket fare is low or high. Its because Indian Railways has monopoly in rail transport, hence the cross elastcity of demand is zero in this market. 

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