# After a careful statistical analysis, the Chidester Company concludes the demand function for its product isQ = 500 - 3P + 2Pr + 0.1Iwhere Q is the quantity demanded of its product, P is the price of its product, Pr is the price of its rival’s product, and I is per capita disposable income (in dollars). At present, P = \$10, Pr = \$20, and I = \$6,000. What is the cross- price elasticity of demand between its product and its rival’s product?  a.0.0388  b.0.0721  c.0.0360 d.-0.0360

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After a careful statistical analysis, the Chidester Company concludes the demand function for its product is

= 500 - 3+ 2Pr + 0.1I

where is the quantity demanded of its product, is the price of its product, Pr is the price of its rival’s product, and is per capita disposable income (in dollars). At present, = \$10, Pr = \$20, and = \$6,000.

What is the cross- price elasticity of demand between its product and its rival’s product?

 a. 0.0388 b. 0.0721 c. 0.036 d. -0.036
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Step 1

The formula of Price Elasticity...

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