A. Calculate the cross-arc elasticity in the following situation. (mathematical method) Price X Amount Y $10 70
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Question:
A. Calculate the cross-arc elasticity in the following situation. (mathematical method)
Price X | Amount Y |
$10 | 70 |
$13 | 100 |
Based on the above result, consumer response regarding products can be classified as substitutes or complementary.
1. Calculate the cross-arc elasticity from the equation
Qdn= 1.5 Pm - 40.
2. Use the economists' method to find out the consumer's behavior when the price Pm changes from $60 to $40.
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