inclass_2 - A new breakfast place opens up in town, but,...

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A new breakfast place opens up in town, but, unfortunately for you, it’s run by a bunch of economists,  who use as a laboratory as much as they use it to make profits.  So this breakfast place is not one of  those all-you-can eat places, instead it charges prices a la carte – for each item.  From the behavior of  people as these prices change, these economists have gotten a lot of elasticity data.  The following  questions are based on that data. 1. The owners first observation is that as the price of bacon goes up, the amount of  sausage bought also increases.  The cross price elasticity of sausage with respect to  bacon is therefore  a. Greater than 0 b. Less than 0 Draw the effect on the market for sausage of this increase in the price of bacon. Draw an increase in demand (please forgive the lack of labels above) 2. An increase in the price of eggs lowers the amount of cheese that people are ordering. 
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inclass_2 - A new breakfast place opens up in town, but,...

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