(a) Consider a firm that is particularly interested in estimates of elasticities. It discovers that its cross-price elasticity of demand between good A, which it sells and good B, which another firm sells is +5.3. Its price elasticity of demand for good A is estimated as -2.5 and its income elasticity of demand is +2.5, while the price elasticity of supply is +0.3. Comment on the implication of these figures for the firm. Discuss the information that this provides to the firm and how it can use this to develop its product, pricing and overall strategy.

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