Author Question: The price elasticity of demand for new cars is 1.2. Hence, a 10 percent price increase will A) ... (Read 69 times)

EAugust · **on:** Jun 29, 2018

The price elasticity of demand for new cars is 1.2. Hence, a 10 percent price increase will

A) decrease the quantity of new cars demanded by 1.2 percent.
B) increase consumer expenditure on new cars by 1.2 percent.
C) decrease the quantity of new cars demanded by 12 percent.
D) increase consumer expenditure on new cars by 12 percent.

Question 2

In the above figure, suppose the economy is initially at point A. People come to expect the future U.S. exchange rate to be higher. As a result there is a change from point A to a point such as ________.

A) point B
B) point C
C) point D
D) point E