The correct answer is: A. Independent goods.
Independent goods are goods that are not related to each other in terms of demand. A change in the price of one good will not have any effect on the demand for the other good.
For example, let’s say that the price of coffee goes up. This will not have any effect on the demand for tea, because coffee and tea are independent goods. People who drink coffee will not suddenly start drinking tea instead, and people who drink tea will not suddenly start drinking coffee instead.
The cross elasticity of price of demand is a measure of how responsive the demand for one good is to a change in the price of another good. It is calculated by taking the percentage change in the quantity demanded of one good and dividing it by the percentage change in the price of the other good.
If the cross elasticity of price of demand is zero, then the goods are said to be independent goods. This means that a change in the price of one good will not have any effect on the demand for the other good.
The other options are incorrect because they are all types of goods that are related to each other in terms of demand.
- Luxury goods are goods that people are willing to spend a lot of money on, even when their income is low.
- Substitute goods are goods that can be used in place of each other. A change in the price of one substitute good will cause a change in the demand for the other substitute good.
- Complementary goods are goods that are used together. A change in the price of one complementary good will cause a change in the demand for the other complementary good.