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Question

Suppose the price of Doritos fall from R12.50 to R8.50. As a result, the quantity of peanuts increases from 50 to

200. Calculate the cross-price elasticity using the arc formulae and interpret your answer. 

Top Answer

Arc E d = [(Qd 2 - Qd 1 ) / midpoint Qd] [(P 2 - P 1 ) / midpoint P] [(Qd 2 - Qd... View the full answer

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