Question: 2.7 Duffy-Deno (2003) estimated that the demand function for broadband service was Qs = 15.6p-0.563 for small firms and Ql = 16.0p-0.296 for larger ones.

2.7 Duffy-Deno (2003) estimated that the demand function for broadband service was Qs = 15.6p-0.563 for small firms and Ql = 16.0p-0.296 for larger ones. These two demand functions cross. What can you say about the elasticities of demand on the two demand curves at the point where they cross?

What can you say about the elasticities of demand more generally (at other prices)? (Hint: The question about the crossing point may be a red herring.

Explain why.) C

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