Homework Help: Managerial Economics

Posted by Econo-missed on Saturday, November 1, 2008 at 4:21pm.

The coefficient of the price of gasoline in the regression of the quantity demanded of automobiles (in millions of units) on the price of gasoline (in dollars) and other variables is -14. (a) calculate the cross price elasticity of demand between automobiles and gasoline at the gasoline $ 1 per gallon and sales of automobiles of 8 (million units).
(b) What would be the cross price elasticity of demand between automobiles and gasoline if sales of automobiles declined from 8 to 6 with an increase in the gasoline price from $ 1 to $ 1.20 per gallon?

Managerial Economics - economyst, Monday, November 3, 2008 at 10:39am
Take a shot, what do you think.
hint: increase the price of gas by 1%, what happens to the quantity of autos (the percentage change)

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