The average resident has a demand for fresh oranges which is a linear function of the...

The average resident has a demand for fresh oranges which is a linear function of the prices of the three goods.

Q=4000 - 200 f + 100 c + 400 p

The subscript ‘f’ denoted fresh oranges, the subscript “c” OJ(orange juice) concentrate, and the subscript “p” peanuts.

Question: Assuming the price of OJ concentrate is fixed at $1 and fresh oranges’ price is fixed at $6, find the cross-price elasticity of demand for fresh oranges relative to peanuts for the average consumer when the price of peanuts is at $2, $8, and $10. What does that tell you about how the average consumer’s views fresh oranges compared to peanuts?

Expert Solution

Rahul Sunny answered 1 hour ago

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