We often observe that items such as different brands of aspirin, gasoline, and tomato sauce are typically
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We often observe that items such as different brands of aspirin, gasoline, and tomato sauce are typically priced the same, particularly when consumers can find these goods in close proximity to each other (such as gas stations on opposite sides of the street, or products next to each other on the same grocery store shelf). What does this indicate about the cross-price elasticity of demand for the different brands of the same product? Would you expect the crossprice elasticity to be relatively large or small in magnitude? Positive or negative?
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