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Unformatted text preview: will increase the demand for cream cheese. x The cross-price elasticity of demand for cream cheese with respect to a change in the price of butter is: cheese c. butter butter cheese c. butter cheese, c. Q P ǻ P ǻ Q e ¡ x this elasticity will be positive since ǻ Q ǻ P cheese c. butter ! ¢ ! x so let’s say: 0.5 e butter cheese, c. , then a one percent increase in the price of butter causes a 0.5 percent increase in the demand for cream cheese Page 49...
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This note was uploaded on 12/29/2011 for the course ECO 311 taught by Professor Willis during the Fall '10 term at SUNY Stony Brook.
- Fall '10