Cross-price elasticity of natural gas


The fact that the cross-price elasticity of natural gas with respect to the price of fuel oil is 0.4 implies that

a. natural gas and fuel oil are substitutes.

b. natural gas is a normal good.

c. the quantity of natural gas demanded will decrease by 1.6% when the price of fuel oil decreases by 4%.

d. both a and c

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Macroeconomics: Cross-price elasticity of natural gas
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