Sales of shampoo by CleanHair,Inc.,have recently decreased from 1,300 to 1,100 units in response to a price decrease from $7 to $5 by its main competitor.Assuming that everything else is being held constant,we can infer that
A) the cross-price ARC-elasticity (midpoints formula) between the two products is -2.
B) the cross-price ARC-elasticity (midpoints formula) between the two products is -½.
C) the cross-price ARC-elasticity (midpoints formula) between the two products is ½.
D) the cross-price ARC-elasticity (midpoints formula) between the two products is 2.
Correct Answer:
Verified
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