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Today, 09:04

f the price of pork chops falls from $8 to $6, and this leads to an increase in demand for apple sauce from 100 to 140 jars, what is the cross-price elasticity of apple sauce and pork chops at a pork chop price of $6

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  1. Today, 09:26
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    -1.6

    Explanation:

    The cross-price elasticity measures how sensible is the demand of a product when the price of another one changes. When the cross-price elasticity is negative, it means that when the price of a good decreases, the demand for the second one increases. When the cross-price elasticity is positive, it means that when the price of a good decreases, the demand for the second one also decreases.

    Cross-price elasticity of the demand = Percent change in quantity of good A/Percent change in price of good B

    Cross-price elasticity of the demand = (40/100) / (-2/8)

    Cross-price elasticity of the demand=0.4/-0.25

    Cross-price elasticity of the demand=-1.6

    The cross-price elasticity of apple sauce and pork chops at a pork chop price of $6 is - 1.6.
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