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Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364

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BuyFindarrow_forward

Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364
Textbook Problem

Suppose the cross-price elasticity of apples with respect to the price of oranges is Chapter 5, Problem 9SCQ, Suppose the cross-price elasticity of apples with respect to the price of oranges is and the price , example  1 and the price of oranges falls by Chapter 5, Problem 9SCQ, Suppose the cross-price elasticity of apples with respect to the price of oranges is and the price , example  2 What will happen to the demand for apples?

To determine

If the cross price elasticity of apples to the price of orange is 0.4 and price of orange falls by 3%, what will happen to the demand for apples?

Explanation

We can use the percentage formula for the cross price elasticity of these two goods:

eao = % change in quantity of apple% change in price of orange0

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