Assume That the Price and Income Elasticities of Demand for Luxury

question 29

Multiple Choice

Assume that the price and income elasticities of demand for luxury cars are EP = -0.52 and EY = 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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Definitions:

Creative Atmosphere

An environment or culture that nurtures innovation, open-mindedness, and the free flow of ideas, supporting creativity.

Business Factors

include the various elements that influence the operation and success of a company, such as market trends, competition, and internal capabilities.

Number

A mathematical object used to count, measure, and label; fundamental in mathematics.

Quality

The standard of something as measured against other things of a similar kind; the degree of excellence of something.