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Suppose that the demand curve of apples is shown as:Qa =45-2Pa+0.2Y +Pb, where Qa.Pa, Pb, Y are the quantity demanded of apples, the price of apples, the price of bananas, and income. respectively. Pa=1; Pb=1:Y=30
1.) Find the price elasticity of demand
2,) Find the income elasticity of demand
3.) Find the cross-price elasticity of demand
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What assumptions about a rival's response to price changes underlie the kinked-demand curve for oligopolists?
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