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Suppose That the Cross Elasticity of Demand for Dell Computers

Question 220

Multiple Choice

Suppose that the cross elasticity of demand for Dell computers with respect to Hewlett Packard computers is 2.1. If Hewlett-Packard lowers its price by 5 percent, other things being equal, what will be the percentage change in the quantity of Dell computers demanded?


A) 2.4 percent
B) -10.5 percent
C) 10.5 percent
D) -42 percent

Correct Answer:

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