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1. A major PC producer lowered the price of its desktop PC from $1,000 to $800. The Q of desktops increased by 25 percent. The

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1. A major PC producer lowered the price of its desktop PC from $1,000 to $800. The Q of desktops increased by 25 percent. The sales manager notices that sales of the company's laser printers increase by 15 percent. a. Calculate the arc price elasticity of the desktop PC. Explain what it means. b. Why have the sales of laser printers increased? Calculate the arc cross price elasticity of laser printers. Based on your calculation, is a laser printer a substitute or a complement? Why? c. Was the new policy benecial for increasing the revenues of the producer? Explain. d. If you were to estimate a demand equation for desktop computers, which variables would you choose as explanatory variables

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