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Q. A car dealer wants to get rid of the stock of last year's model. Assume that the dealer knows from past experience that the price elasticity of demand for cars is unitary (= 1). If the price of the cars is currently $20,000 also the dealer wants to increase the quantity demanded from 30 units to 50 units, Illustrate what must the new price be if the dealer is to sell the 20 additional cars?

Q. "Forecasters' predictions of inflation are notoriously inaccurate, so their expectations of inflation cannot be rational." Is this statement true, false, or uncertain?

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Business Economics, Economics

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