In the face of gasoline prices approaching 4.00 automobile ...

[kamilo84]

In the face of gasoline prices approaching 4.00 automobile dealerships are heavily marketing their compact cars and hybrid vehicles.
 
  However, an interesting development is that many of these dealerships are offering their economy cars at MSRP (manufacturers suggested retail price) without offering discounts. What do you suppose these dealerships believe about the price elasticity of demand for these economy cars?

Question 2

Refer to Figure 6-1. A perfectly elastic demand curve is shown in
 
  A) Panel A. B) Panel B. C) Panel C. D) Panel D.

[nixon_s]

Answer to Question 1

The dealerships may be assuming that the economy cars now have become more price inelastic in demand as consumers who are dumping their gas guzzling vehicles don't have many other choices.

Answer to Question 2

B