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Economics

As an analyst for the aircraft manufacturer Airbus aircraft (A), your job entails advising Airbus on pricing strategies regarding their aircraft. You estimate that the price elasticity of demand for Airbus aircraft is -0.80, while the cross elasticity of demand, with respect to the price of Boeing aircraft (B), is 0.50. In a bold move, Boeing announces plans to cut the price of its product by 10%. Desiring to "maintain the position of Airbus in the market," you are asked to recommend a price adjustment for Airbus just sufficient to offset the impact of Boeing's move on Airbus sales. What do you recommend? Show your work.

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91718768

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