Posted by Jami on .
I know this might be basic.....but I am still not sure about subject of elasticity? How do I know the effect, if no price or quantity demanded is given?
Assuming that the price elasticity of demand for automobiles in the United States is 1.2 and that the income elasticity of demand is 3:
a) What would be the effect of a 5 percent increase in auto prices on the quantity of autos demanded?
b) What would be the effect of a 2 percent increase in income on the quantity of autos demanded?
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2. (part II): http://www.uri.edu/artsci/newecn/Classes/Art/INT1/Mic/Elast/elast1b.html
3. (example term papers): http://www.uri.edu/artsci/newecn/Classes/Art/INT1/Mic/Elast/elast1b.html
4. (practice problems with answers): http://www.washburn.edu/sobu/dnizovtsev/200P04ans.html