Let the market demand for rye bread be given by Q = 500 + I - 250Prye + 400Pwheat,where Q is monthly demand in number of loaves,I is average monthly income in dollars,Prye is the price of a loaf of rye bread,and Pwheat is the price of a loaf of wheat bread.If I = $1,000,Prye = $2,and Pwheat = $3,calculate the following (based on 10% changes in denominators):
A)the arc price elasticity of demand for rye bread
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