Assume that the price and income elasticities of demand for luxury cars are Ep = -0.52 and I y = 3.2 respectively. In the coming year, car prices are expected to rise by 2 percent and income by 8 percent. Based on this information, sales of cars are expected to a) fall by 0.52% b) increase by 24.56% c) increase by 5% d) fall by 3.04% e) fall by 32.84%
Assume that the price and income elasticities of demand for luxury cars are Ep = -0.52 and I y = 3.2 respectively. In the coming year, car prices are expected to rise by 2 percent and income by 8 percent. Based on this information, sales of cars are expected to a) fall by 0.52% b) increase by 24.56% c) increase by 5% d) fall by 3.04% e) fall by 32.84%
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![-0.52 and E
Assume that the price and income elasticities of demand for luxury cars are Ep
Y = 3.2 respectively. In the coming year, car prices are expected to rise by 2 percent and
income by 8 percent. Based on this information, sales of cars are expected to
a) fall by 0.52%
b) increase by 24.56%
c) increase by 5%
d) fall by 3.04%
e) fall by 32.84%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F422a3402-f0e9-4c20-b89e-5230245172a8%2F455ab1df-3a7e-4c57-8d8e-fc9085360692%2Fa02bq6q_processed.jpeg&w=3840&q=75)
Transcribed Image Text:-0.52 and E
Assume that the price and income elasticities of demand for luxury cars are Ep
Y = 3.2 respectively. In the coming year, car prices are expected to rise by 2 percent and
income by 8 percent. Based on this information, sales of cars are expected to
a) fall by 0.52%
b) increase by 24.56%
c) increase by 5%
d) fall by 3.04%
e) fall by 32.84%
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