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Answer to Question #117332 in Microeconomics for Anisha
Question #117332
The cross elasticity of demand for a popular brand of a cola drink has been estimated to be +1.8 and for an iced tea to be +0.8, explain what each means
Expert's answer
The greater the interchangeability of the two goods, the greater the value of the cross elasticity of demand for price.
Consequently, cola is able to replace the test drink more than iced tea.
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