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    Cross price-elasticity, Income elasticity

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    A. Calculate the cross-price elasticity of demand coefficient of a firm's product X, given that a 5% increase in the price of its close substitute, product Y, causes the quantity demand of product X to increase by 10%.

    B.Calculate the income-elasticity of demand coefficient for a product for which a 4% increase in consumers' income will increase the quantity demanded by 6%.

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    Solution Summary

    This solution shows the steps for calculating cross-price elasticity and income elasticity.