It Is Estimated That a 3 Percent Drop in the Price

question 61

Multiple Choice

It is estimated that a 3 percent drop in the price of Asian and European cars will decrease the demand for American cars by 0.84 percent. From this information one can conclude that:

• A) the income elasticity of demand for American cars is less than 1.
• B) European and Asian cars are luxuries.
• C) European and Asian cars are substitutes for American cars.
• D) European and Asian cars are complements for American cars.

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