demand & Supply

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If the demand for butter rises by 4% while the price of margarine rises by 8%, then calculate the cross price elasticity of demand of butter with respect to the price of margarine?


The formula for the cross-price elasticity is (%change in Qa)/(%change in Pb) Where Qa is the quantity demanded of good a, and Pb is the price of good b. Apply this formula. You have all the information you need.

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