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Question
A local bakery gives information on consumer purchasing habits for muffins and cupcakes. It says that when the price of a muffin is $1, people buy 55 cupcakes. When the price of a muffin is raised to $2, cupcake purchases go up to 65 cupcakes. The cross-price elasticity of demand is
a. 0.50.
b. 0.25.
c. 0.67.
d. 2.00.
e. 4.00.
Answer
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