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Unformatted text preview: companies total rev. rise or fall? the fall in P reduces rev, but rise in Q increases demand. TR increases b/c Q > P. interdiction reduces the supply of drugs since demand for drugs is inelastic, P rises proportionally EDUCATION for normal goods, income elasticity > 0 for inferior goods, income elasticity < 0 THE CROSS-PRICE ELASTICITY OF DEMAND measures the response of demand for one good to changes in the price of another good. % Q0 of oranges % P of apples incr. = cross-price elast of demand. substitutes generally. cross-price elast. < 0, compliments. for substitutes, CPE > 0...
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