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The quantity demanded of turkey decreased from 5,000 to 4,750 when the price of chicken decreased from $2.00 to $1.90. What is the estimated cross-price elasticity of demand for turkey

Respuesta :

Answer:

The estimated cross price elasticity of demand is -1

Explanation:

Here, we want to calculate the cross-price elasticity value

Mathematically, the cross price elasticity value is;

Percentage change in quantity of turkey/percentage change in price of chicken

percentage change in quantity of turkey will be

(4750-5000)/5000 = -0.05%

Percentage change in price of chicken will be

(1.9-2.0)/2 = -0.05

So the cross-price elasticity if demand will be ; 0.05/-0.05 = -1

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