ECON 555 DEWD 8t SUPPLY EXAM 4. PAGE 4 OF 7 You are told that: a. the price elasticity of demand for widgets is -0.?5 {its absolute value is, therefore, 0.75}, b. the income elasticity of widgets is 2, and c. the cross-price elasticity of widgets and gadgets is 4. Part 1: Keeping in mind that raising prices results in decreasing sales: a. what will be the percentage change in quantity demanded if prices are increased by 50%? h. Will the total revenue of the rm increase, decrease, or remain the same when prices are increased by 50%? Part 2: If there is a 2D% across the board increase in income taxes, lowering the income of all consumers: a. Will the sales of widgets increase, decrease, or remain the same? b. By what percentage amount will the quantity sold change, if at all? Part 3: If gadget prices rise by 15%: a. In what direction (increase, decrease, or no change) will widget sales change I). By what percentage amount will widget sales change, if at all