The price elasticity of new automobile purchases is about 1.2 . This implies that an increase of $1,000 on a $10,000 automobile will
a. reduce the number of autos sold by approximately 1.2 percent.
b. increase the consumer expenditures on autos by approximately 1.2 percent.
c. reduce the number of autos sold by approximately 12 percent.
d. increase consumer expenditures on autos by approximately 12 percent.
c
You might also like to view...
When economists say that an interest rate is compounding, they imply that:
A) the rate of interest decreases every year. B) the rate of interest increases every year. C) interest is being earned on interest. D) double the interest payment is received every two years.
Which of the following is a valid reason for protecting an industry?
A) The industry is unable to compete with low-wage foreign competitors. B) Protection penalizes lax environmental standards. C) Protection keeps richer nations from exploiting the workers of poorer countries. D) None of the above reasons is a valid reason for protection.