3.4 Sales of cars declined by 15 per cent in a recent recession. During this period...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
3.4 Sales of cars declined by 15 per cent in a recent recession. During this period the price of cars rose by 6 per cent, average income fell by 4 per cent and the price of petrol rose by 20 per cent. It has been estimated that the PED for cars is - 0.8 and the YED is 1.25. a. Estimate the effect of the decline in income on car sales. b. Estimate the effect of the car price rise on sales. c. Estimate the CED between petrol and cars; compare your estimate using simple elasticities and additive effects with the estimate obtained using a power form of demand equation. 3.4 Sales of cars declined by 15 per cent in a recent recession. During this period the price of cars rose by 6 per cent, average income fell by 4 per cent and the price of petrol rose by 20 per cent. It has been estimated that the PED for cars is - 0.8 and the YED is 1.25. a. Estimate the effect of the decline in income on car sales. b. Estimate the effect of the car price rise on sales. c. Estimate the CED between petrol and cars; compare your estimate using simple elasticities and additive effects with the estimate obtained using a power form of demand equation.
Expert Answer:
Answer rating: 100% (QA)
Estimating the effects on car sales a Income decline Income elasticity YED 125 Income change 4 negat... View the full answer
Related Book For
Accounting and Finance An Introduction
ISBN: 978-1292088297
8th edition
Authors: Peter Atrill, Eddie McLaney
Posted Date:
Students also viewed these economics questions
-
What is the email address for the Architectural Firm? What firm is responsible for the Structural Engineering? What does the acronym DPG represent? What does the abreviation "ohp" refer to on Sheet...
-
1. Based on the information provided in the case below, what is the key strategic goal for Tim Hortons as of August 2014? It would be a year of dramatic change for Tim Hortons Inc. On August 26,...
-
Introduction In 2010, New United Motor Manufacturing, Inc., a unique and highly successful joint venture between Americas General Motors and Japans Toyota, went out of business. NUMMI, as the...
-
The local bank manager has found that one out of every 400 bank loans end up in default. Last year the bank made 400 loans. What is the probability that two bank loans will end up in default?
-
Suppose a company have a sales force and customer service division. You are in charge of coming up with a customer satisfaction strategy to help the organization increase sales and customer...
-
Suppose that there are two groups of consumers in the population, constrained and unconstrained, with equal numbers of each. The constrained consumers look like the ones in Figure 10.5, while the...
-
What is it that differentiates MNEs from domestic corporations and gives rise to differences in accountability?
-
Would Aimer likely be able to avoid reinstating Saldona under the key employee exception? Why or why not? Rick Saldona began working as a traveling salesperson for Aimer Winery in 1979. Sales...
-
For functions f and g whose graphs are shown, suppose that h(x) = ln(f(x) + g(x)). Find h' y h'(1) 1 = 3- 10 9(x) 10 6 Note: Enter an exact answer (e.g. fraction) and not a decimal approximation.
-
1. What is the cost of debt for Sunrise Bakery? 2. What is their cost of equity? 3. What is the WACC? 4. Which cost of capital should be used to evaluate the feasibility of the oven purchase? 5....
-
Which of the following statements is (are) accurate regarding equipment purchased within a business? (Check all that apply.) Equipment purchases are expensed, in their entirety, in the period in...
-
Suppose the corporation assumed a mortgage of $1,380,000 attached to the building and land. The fair market value is $800,000 and the fair market value of the land is $1,696,000. The fair market...
-
Warnerwoods Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March. Date Mar. Mar. 5 Mar. 9 Sales Mar. 18 Purchase Mar. 25 Purchase Mar....
-
PROBLEM 2 An interesting idea has been given in Iri at all[1] to deal with end point singular,ties in the integral Define Where c is a positive constant and The function Take c=4 for your...
-
Computer equipment was required at the beginning of the year at a cost of $65,000 that has estimated residual value of $3,800 and an estimated useful life of 8 years. Determine the (a) depreciable...
-
1) What must be the speed of electrons (in m/s) if the matter wave associated with them is to have the same wavelength as the spectral line in the Lyman series of the hydro- gen spectrum in which the...
-
Fran www and INIMT WIS Material 13. ANAM CO a expremant to different malertale N and Y She S 100nt of water onto material and material yas shown below Amount of water in beaker (m) CARAMISH Beaker A...
-
(a) Given a mean free path = 0.4 nm and a mean speed vav = 1.17 105 m/s for the current flow in copper at a temperature of 300 K, calculate the classical value for the resistivity of copper. (b)...
-
How does activity-based costing differ from the traditional approach? What is the underlying difference in philosophy between them?
-
Manet plc had the following share capital and reserves as at 1 June 2014: ......................................................................................m Share capital (0.25 ordinary shares)...
-
When we say that some business activity has high operating gearing, what do we mean? What are the implications for the business of high operating gearing?
-
A company often test-markets a proposed product in a specific area or location. Suppose that you wish to test-market your new, revolutionary SuperWax car wax, which requires only one application for...
-
The idea for New Belgium Brewing Company began with a bicycling trip through Belgium, where some of the worlds finest ales have been brewed for centuries. As Jeff Lebesch, a U.S. electrical engineer,...
-
It is helpful to think of a total product offering as having a combination of three interdependent elements: the core product itself, its supplemental features, and its symbolic or experiential...
Study smarter with the SolutionInn App