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A researcher estimated that the price elasticity of demand for automobiles in the United States is -1.2, while the income elasticity of demand is 3.0. Next year, U.S. auto makers intent to increase the average price of automobiles by 5 percent, and they expect consumers' disposable income to rise by 3 percent.

(a) if sales of domestically produced automobiles do expect U.S auto makers to sell next year? (b) By how much should domestic auto makers increase sales by 5 percent next year?

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91529337

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