Question

A recent study determined the following elasticities for Volkswagen Beetles: Price elasticity of demand = 2 Income elasticity of demand = 1.5 The supply of Beetles is elastic. Based on this information, are the following statements true or false? Explain your reasoning. A. A 10% increase in the price of a Beetle will reduce the quantity demanded by 20%. (0.5 Marks) B. An increase in consumer income will increase the price and quantity of Beetles sold. (0.5 Marks)

Answer 1

Answer:

A because more cost less will take