Using data on automobile purchases, P. McCarty (REStat 1996) estimated the following elasticities for compact cars sold in the United States. Own elasticity of demand Income Elasticity Cross Price* - 0.87 1.70 .82 Responsiveness of demand for compact cars to changes in the price of other types of car odels, such as luxury cars. a) What is the percent change in quantity demanded for compact cars given a 2 percent decrease in the price of compact cars? b) What is the percent change in demand for compact cars given a 2 percent decrease in the price of other car models? c) What is the percent change in demand for compact cars given a 2 percent decrease in income? d) Is demand for compact cars elastic or inelastic? Explain briefly. e) Would a decrease in the price of compact cars generate more or less revenue from the sale of compact cars? f) Are compact cars a normal or inferior good? Explain briefly.

Using data on automobile purchases, P. McCarty (REStat 1996) estimated the following elasticities for compact cars sold in the United States. Own elasticity of demand Income Elasticity Cross Price* - 0.87 1.70 .82 Responsiveness of demand for compact cars to changes in the price of other types of car odels, such as luxury cars. a) What is the percent change in quantity demanded for compact cars given a 2 percent decrease in the price of compact cars? b) What is the percent change in demand for compact cars given a 2 percent decrease in the price of other car models? c) What is the percent change in demand for compact cars given a 2 percent decrease in income? d) Is demand for compact cars elastic or inelastic? Explain briefly. e) Would a decrease in the price of compact cars generate more or less revenue from the sale of compact cars? f) Are compact cars a normal or inferior good? Explain briefly.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Congratulations! You have just landed your first job out of college as an economic analyst at the Bureau of Labor Statistics. Your starting salary is $55,000 per year; an increase of 250% per year over the salary you made at the local coffee shop. The corresponding table gives the percentage change in your purchases of each good after your income increases. Use this information to estimate your income elasticity of demand for each of the items. Meals at restaurants Cups of coffee Instant noodles a. Income elasticity for meals at restaurants is b. Income elasticity for cups of coffee is c. Income elasticity for instant noodles is Percentage change in quantity 500 80 -75 d. Based on the calculations of income elasticity, meals at restaurants are and ramen noodles are coffee is
give me accurate answer
A consumer buys 100 units of a good at a price of 8 per unit if the price elasticity of demand is -2 at what price will he buy 64 units?
Suppose the price elasticity of demand for a good is -0.4 how will be the expenditure on good be effective when there is 10% increase in the price of the goods
Given the following price elasticity of demand, derive the demand function
according to the income elasticity formula, by how much will popcorn sales increase if average income goes up by 18?(assume the income elasticity of popcorn is 3.29.)
How would you expect the elasticity of demand for each of the following products to compare with the price elasticity of demand for standard car tires? Explain your answer. a. Snow tires (not necessary, but handy on snowy days) b. School bus tires (purchased with tax dollars on a fixed schedule) c. Bicycle tires (which require a smaller portion of a consumer's income than car tires) d. Tires made by the most reputable company (more of a luxury than a necessity)
The price elasticity of demand for personal computers is estimated to be −2.5. If the price of personal computers declines by 20 percent, Calculate percentage increase in the quantity of computers sold?
Data from the Bureau of Labor Statistics shows that U.S. income increased by 10% while consumer data shows that the quantity of Netflix subscriptions changed from 100 to 115 in the past year. Compute the income elasticity for Netflix subscriptions, is the demand for Netflix subscription income elastic or income inelastic?
Explain why the own-price elasticity is a pure number with no units and is negative.
Two goods have a cross-price elasticity of demand of 1.2: Would you describe the nature of goods? If the price of one good increase by 5 percent, what will happen to the demand for the other good. Also estimates its value holding other factors constant?
Based on the data in the table below, what is the own-price elasticity of demand for widgets? Supply and Demand for Widgets Price of Consumer Quantity Quantity Income Demanded Supplied Price of Widgets Gadgets $4 $5 $100 20 15 $6 $5 $200 22 25 $6 $4 $100 18 25 $6 $5 $100 12 25