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You Are Told That the Price Elasticity of Demand for Widgets

Question 45

Essay

You are told that the price elasticity of demand for widgets is -0.75,the income elasticity of widgets is 2,and the cross-price elasticity of widgets and gadgets is 4.Carefully explain what information you can gather from each of these figures.

Correct Answer:

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Demand for this good is inelastic with r...

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