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On average, eP _ [(-2.5) + (-4.5) + (-5)]/3 _ -4. A1% increase (decrease) in price will lead to a 4% decrease (increase) in the quantity demanded. The demand for sports watches is, therefore, elastic with respect to price.

D. In calculating the arc cross-price elasticity of demand, only consider consecutive months when there was a change in the price of dress watches, but no change in advertising or the price of sports watches:

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