Question: Colgate sells its standard size toothpaste for tk. 25. Its sales have been on an average 8,000 units per months over the past year. Recently,

Colgate sells its standard size toothpaste for tk. 25. Its sales have been on an average 8,000 units per months over the past year. Recently, Its close competitor Close up reduced the price of its same standard size toothpaste from Tk. 35 to TK. 30. As a result,Colgate sales declined by 1500 units per month.

1) Calculate the cross elasticity between the two products.

2) What does your estimate indicate the relationship between the two?

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