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Recently, in Smalltown, the price of Twinkies fell from $0.80 to $0.70. As a result, the quantity demanded of HoHo’s decreased from 120 to 100. What would be the 9appropriate elasticity to compute? Use the midpoint method, compute this elasticity. What does your answer tell you?

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tutordamola

Answer:

The answer is -1.36

Meaning the goods are complements.

Explanation:

This is a cross price elasticity.

Please find the attached file for calculation.

The negative sign of 1.36 tells us that both Twinkies and HoHo are complements.

Complement goods are consumed together as a pair. So the price of twinkies fell, the quantity of HoHo too dropped

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ughmondayz

Answer:

-1.36

Explanation:

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