1. Calculate the price elasticity of demand. a) When the price of a phone call increases from $8 to $12, the volume of calls falls from 25,000 per hour to 15,000. b) New car dealers currently sell approximately 1,650 vehicles annually at an average price of $4 million. They have told the government that if the proposed higher import duty raises the price of new cars by $12 million, they expect their sales to fall by about 300 per year.

1. Calculate the price elasticity of demand. a) When the price of a phone call increases from $8 to $12, the volume of calls falls from 25,000 per hour to 15,000. b) New car dealers currently sell approximately 1,650 vehicles annually at an average price of $4 million. They have told the government that if the proposed higher import duty raises the price of new cars by $12 million, they expect their sales to fall by about 300 per year.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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