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    Effect of Price Changes on Quantity Demanded

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    Using table (below), determine by how much the demand for Florida Indian River oranges would change as a result of a 10 percent increase in the price of Florida interior oranges, and vice versa.


    Type of Orange Fl Indian River Florida Interior California
    FL Indian River -3.07 +1.56 +0.01
    Florida Interior +1.16 -3.01 +0.14
    California +0.18 +0.09 -2.76

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    Solution Preview

    Let X denotes Florida Indian River orange
    Let Y denotes Florida interior oranges

    Case 1:
    Percent change in prices of Y=+10% (+ve sign indicates an increase)
    Cross price elasticity of X=percent change in demand ...

    Solution Summary

    The solution analyzes the effect of price change on the quantity demanded with the help of elasticity values given.